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(Mark One) | ||
o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
OR | ||
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended December 31, 2008 | ||
OR | ||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
OR | ||
o | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
Date of event requiring this shell company report | ||
For the transition period from to |
KT Corporation | The Republic of Korea | |
(Translation of Registrant’s name into English) | (Jurisdiction of incorporation or organization) |
Title of each class | Name of each exchange on which registered | |
American Depositary Shares, each representing one-half of one share of common stock | New York Stock Exchange, Inc. | |
Common Stock, par value | New York Stock Exchange, Inc.* |
(not including 71,500,404 shares of common stock held by the company as treasury shares)
U.S. GAAPo IFRSo Otherþ
* | Not for trading, but only in connection with the registration of the American Depositary Shares. |
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Item 1. | Identity of Directors, Senior Managers and Advisers |
Item 1.A. | Directors and Senior Management |
Item 1.B. | Advisers |
Item 1.C. | Auditors |
Item 2. | Offer Statistics and Expected Timetable |
Item 2.A. | Offer Statistics |
Item 2.B. | Method and Expected Timetable |
Item 3. | Key Information |
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Year Ended December 31, | ||||||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | 2008 | |||||||||||||||||||
(In billions of Won and millions of Dollars, except per share data) | ||||||||||||||||||||||||
Korean GAAP(1): | ||||||||||||||||||||||||
Operating revenues | 17,068 | 17,192 | 17,825 | 18,660 | 19,645 | U | S$15,566 | |||||||||||||||||
Operating expenses | 14,588 | 14,781 | 15,442 | 16,915 | 18,217 | 14,435 | ||||||||||||||||||
Operating income | 2,481 | 2,411 | 2,383 | 1,745 | 1,428 | 1,131 | ||||||||||||||||||
Donations and contribution payments(2) | 147 | 84 | 86 | 90 | 80 | 63 | ||||||||||||||||||
Income taxes(3) | 578 | 399 | 476 | 357 | 168 | 133 | ||||||||||||||||||
Income from continuing operations | 1,431 | 1,365 | 1,510 | 1,097 | 513 | 407 | ||||||||||||||||||
Income (loss) from discontinuing operations | — | (5 | ) | — | 74 | — | — | |||||||||||||||||
Net Income | 1,431 | 1,360 | 1,510 | 1,171 | 513 | 407 | ||||||||||||||||||
Attributable to equity holders of the parent | 1,282 | 1,085 | 1,292 | 1,056 | 450 | 357 | ||||||||||||||||||
Attributable to minority interests | 149 | 275 | 218 | 115 | 63 | 50 | ||||||||||||||||||
Basic income per share from continuing operations | 6,084 | 5,154 | 6,153 | 4,754 | 2,217 | 1.76 | ||||||||||||||||||
Basic net income per share(4) | 6,084 | 5,131 | 6,155 | 5,112 | 2,217 | 1.76 | ||||||||||||||||||
Diluted income per share from continuing operations | 5,697 | 5,148 | 6,146 | 4,754 | 2,217 | 1.76 | ||||||||||||||||||
Diluted net income per share(5) | 5,697 | 5,124 | 6,148 | 5,112 | 2,217 | 1.76 | ||||||||||||||||||
Dividends per share(6) | 3,000 | 3,000 | 2,000 | 2,000 | 1,120 | 0.89 | ||||||||||||||||||
U.S. GAAP(7): | ||||||||||||||||||||||||
Operating revenues | 12,240 | 12,328 | 14,088 | 17,961 | 18,613 | U | S$14,749 | |||||||||||||||||
Operating income | 1,944 | 1,539 | 1,868 | 1,498 | 1,194 | 946 | ||||||||||||||||||
Income taxes | 387 | 356 | 357 | 270 | 178 | 141 | ||||||||||||||||||
Income from continuing operations | 1,405 | 1,154 | 1,329 | 995 | 518 | 411 | ||||||||||||||||||
Income (loss) from discontinuing operations | — | (5 | ) | — | 74 | — | — | |||||||||||||||||
Net income | 1,405 | 1,149 | 1,329 | 1,069 | 518 | 411 | ||||||||||||||||||
Basic income per share from continuing operations | 6,663 | 5,452 | 6,331 | 4,814 | 2,554 | 2.02 | ||||||||||||||||||
Basic income per share(4) | 6,663 | 5,428 | 6,333 | 5,172 | 2,554 | 2.02 | ||||||||||||||||||
Diluted income per share from continuing operations | 6,215 | 5,447 | 6,325 | 4,814 | 2,554 | 2.02 | ||||||||||||||||||
Diluted income per share(5) | 6,215 | 5,423 | 6,327 | 5,172 | 2,554 | 2.02 |
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Year Ended December 31, | ||||||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | 2008 | |||||||||||||||||||
(In billions of Won and millions of Dollars) | ||||||||||||||||||||||||
Korean GAAP(1): | ||||||||||||||||||||||||
Working capital(8) | (1,526 | ) | 1,309 | 558 | 564 | 1,833 | US$ | 1,452 | ||||||||||||||||
Net property and equipment | 15,721 | 15,087 | 15,167 | 15,288 | 15,189 | 12,035 | ||||||||||||||||||
Total assets | 26,473 | 24,678 | 24,243 | 24,127 | 26,139 | 20,712 | ||||||||||||||||||
Long term debt, excluding current portion | 6,985 | 7,360 | 6,097 | 5,973 | 7,947 | 6,297 | ||||||||||||||||||
Refundable deposits for telephone installation | 1,087 | 958 | 907 | 841 | 782 | 619 | ||||||||||||||||||
Total stockholders’ equity | 9,026 | 10,390 | 10,697 | 11,138 | 11,088 | 8,786 | ||||||||||||||||||
U.S. GAAP(7): | ||||||||||||||||||||||||
Working capital(8) | (763 | ) | 334 | 333 | 332 | 1,640 | US$ | 1,299 | ||||||||||||||||
Net property and equipment | 10,846 | 10,677 | 14,729 | 14,671 | 14,460 | 11,458 | ||||||||||||||||||
Total assets | 20,384 | 18,383 | 24,098 | 24,023 | 25,974 | 20,582 | ||||||||||||||||||
Total stockholders’ equity | 6,660 | 7,345 | 8,038 | 8,438 | 8,490 | 6,728 |
Year Ended December 31, | ||||||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | 2008 | |||||||||||||||||||
(In billions of Won and millions of Dollars) | ||||||||||||||||||||||||
Korean GAAP: | ||||||||||||||||||||||||
Net cash provided by operating activities | 4,719 | 5,865 | 5,714 | 4,265 | 2,919 | US$ | 2,313 | |||||||||||||||||
Net cash used in investing activities | (3,618 | ) | (2,526 | ) | (3,061 | ) | (3,449 | ) | (3,531 | ) | (2,798 | ) | ||||||||||||
Net cash provided by (used in) financing activities | (106 | ) | (3,601 | ) | (2,367 | ) | (1,368 | ) | 1,051 | 833 | ||||||||||||||
U.S. GAAP(7): | ||||||||||||||||||||||||
Net cash provided by operating activities | 3,613 | 3,588 | 4,667 | 4,260 | 2,889 | US$ | 2,289 | |||||||||||||||||
Net cash used in investing activities | (2,607 | ) | (735 | ) | (2,432 | ) | (3,410 | ) | (3,502 | ) | (2,775 | ) | ||||||||||||
Net cash provided by (used in) financing activities | (19 | ) | (3,362 | ) | (1,671 | ) | (1,271 | ) | 1,147 | 909 |
As of December 31, | ||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Lines installed (thousands)(9) | 25,577 | 26,190 | 26,838 | 26,671 | 26,008 | |||||||||||||||
Lines in service (thousands)(9) | 21,091 | 20,837 | 20,331 | 19,980 | 18,883 | |||||||||||||||
Lines in service per 100 inhabitants(9) | 43.8 | 43.1 | 42.0 | 41.2 | 38.8 | |||||||||||||||
Mobile subscribers (thousands)(10) | 11,729 | 12,302 | 12,914 | 13,721 | 14,365 | |||||||||||||||
Broadband Internet subscribers (thousands) | 6,078 | 6,242 | 6,353 | 6,516 | 6,712 |
(1) | Through December 31, 2008, the Korea Accounting Standards Board has issued Statements of Korea Accounting Standards (“SKAS”) No. 1 through No. 25. Among these statements, SKAS No. 1 through |
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No. 10 and SKAS No. 12 through No. 20 are required to be applied in the prior periods. Although SKAS No. 11 and SKAS No. 21 through No. 25 are required to be applied starting in 2007, the balances of 2005 and 2006 have been reclassified in accordance with SKAS No. 16 and No. 21. The balances of 2004 have not been reclassified in accordance with such statements. | ||
(2) | Includes donations and contributions to the Government’s Information and Telecommunication Improvement Fund, the Korea Electronic Telecommunication Research Institute and other institutes supporting science and technology research prior to 2005. In 2007, we reclassified the contributions to the Government’s Information and Telecommunication Improvement Fund to operating expenses and modified related figures for 2007, 2006 and 2005. | |
(3) | With the early adoption in 2006 of the Application of Korea Accounting Standard06-2 “Deferred Tax Accounting for Investments in Subsidiaries, Affiliated Companies Accounted for Using the Equity Method, and Interest in Joint Ventures,” the amounts for 2005 and prior years were restated in 2006 as required by this standard. | |
(4) | Basic earnings per share under Korean GAAP and U.S. GAAP is calculated by dividing net earnings by the weighted average number of shares outstanding during the period. The weighted average number of shares of common stock outstanding during the period was 210,759 thousand for 2004, 211,565 thousand for 2005, 209,895 thousand for 2006, 206,599 thousand for 2007 and 202,891 thousand for 2008. | |
(5) | Diluted earnings per share are calculated based on the effect of dilutive securities that were outstanding during the period. The denominator of the diluted earnings per share computation is adjusted to include the number of additional common shares that would have been outstanding if the dilutive securities had been converted into common stock. In addition, the numerator is adjusted to include the after-tax amount of interest recognized associated with convertible notes. The weighted average number of common and common equivalent shares outstanding was 233,270 thousand for 2004, 211,822 thousand for 2005, 210,150 thousand for 2006, 206,599 thousand for 2007 and 202,891 thousand for 2008. | |
(6) | The calculation of dividends per share represents the weighted average dividends paid per share. | |
(7) | See Note 38 to the Consolidated Financial Statements for reconciliation to U.S. GAAP. | |
(8) | “Working capital” means current assets minus current liabilities. | |
(9) | Including public telephones. | |
(10) | Includes subscribers of KTF and resale subscribers of KT Corporation. As of December 31, 2004, KTF had approximately 9.5 million subscribers and KT Corporation had approximately 2.2 million resale subscribers. As of December 31, 2005, KTF had approximately 9.8 million subscribers and KT Corporation had approximately 2.5 million resale subscribers. As of December 31, 2006, KTF had approximately 10.2 million subscribers and KT Corporation had approximately 2.7 million resale subscribers. As of December 31, 2007, KTF had approximately 10.8 million subscribers and KT Corporation had approximately 2.9 million resale subscribers. As of December 31, 2008, KTF had approximately 11.5 million subscribers and KT Corporation had approximately 2.8 million resale subscribers. |
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At End | Average | |||||||||||||||
Period | of Period | Rate(1) | High | Low | ||||||||||||
(Won per US$1.00) | ||||||||||||||||
2004 | 1,043.8 | 1,145.3 | 1,195.5 | 1,038.3 | ||||||||||||
2005 | 1,013.0 | 1,024.2 | 1,060.3 | 998.2 | ||||||||||||
2006 | 929.6 | 956.1 | 1,013.0 | 918.0 | ||||||||||||
2007 | 938.2 | 929.2 | 950.0 | 902.2 | ||||||||||||
2008 | 1,257.5 | 1,102.6 | 1,509.0 | 934.5 | ||||||||||||
December | 1,257.5 | 1,373.8 | 1,352.4 | 1,335.0 | ||||||||||||
2009 (through June 26) | 1,283.6 | 1,349.5 | 1,573.6 | 1,236.1 | ||||||||||||
January | 1,368.5 | 1,346.1 | 1,391.0 | 1,257.5 | ||||||||||||
February | 1,516.4 | 1,429.5 | 1,516.4 | 1,376.2 | ||||||||||||
March | 1,377.1 | 1,462.0 | 1,573.6 | 1,328.9 | ||||||||||||
April | 1,348.0 | 1,341.9 | 1,398.2 | 1,316.2 | ||||||||||||
May | 1,272.9 | 1,258.7 | 1,307.3 | 1,236.1 | ||||||||||||
June (through June 26) | 1,283.6 | 1,258.9 | 1,287.7 | 1,236.7 |
(1) | The average rate for each full year is calculated as the average of the market average exchange rates on the last business day of each month during the relevant year. The average rate for a full month is calculated as the average of the market average exchange rates on each business day during the relevant month (or portion thereof). |
Item 3.B. | Capitalization and Indebtedness |
Item 3.C. | Reasons for the Offer and Use of Proceeds |
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• | difficulties in integrating the operations of KTF with those of KT Corporation, including information systems, personnel, policies and procedures, and in reorganizing or reducing overlapping personnel, operations, marketing networks and administrative functions; | |
• | unforeseen contingent risks or latent liabilities relating to the merger that may become apparent in the future; | |
• | difficulties in managing a larger business; and | |
• | loss of key management personnel or customers. |
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• | continuing difficulties in the housing and financial sectors in the United States and elsewhere and the resulting adverse effect on the global financial markets; | |
• | a slowdown in consumer spending and the overall economy; | |
• | adverse changes or volatility in foreign currency reserve levels, commodity prices (including oil prices), exchange rates (including fluctuation of the Dollar or Japanese Yen exchange rates or revaluation of the Chinese renminbi), interest rates or stock markets; | |
• | adverse developments in the economies of countries that are important export markets for Korea, such as the United States, Japan and China, or in emerging market economies in Asia or elsewhere; | |
• | the continued emergence of the Chinese economy, to the extent its benefits (such as increased exports to China) are outweighed by its costs (such as competition in export markets or for foreign investment and the relocation of the manufacturing base from Korea to China); | |
• | the economic impact of any pending or future free trade agreements, including those with the United States or the European Union; | |
• | social and labor unrest; | |
• | substantial decreases in the market prices of Korean real estate; | |
• | a decrease in tax revenues and a substantial increase in the Government’s expenditures for unemployment compensation and other social programs that, together, would lead to an increased government budget deficit; |
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• | financial problems or lack of progress in restructuring of Korean conglomerates, other large troubled companies, their suppliers or the financial sector; | |
• | loss of investor confidence arising from corporate accounting irregularities and corporate governance issues of certain Korean conglomerates; | |
• | geo-political uncertainty and risk of further attacks by terrorist groups around the world; | |
• | the recurrence of severe acute respiratory syndrome or an outbreak of avian flu in Asia and other parts of the world; | |
• | deterioration in economic or diplomatic relations between Korea and its trading partners or allies, including deterioration resulting from trade disputes or disagreements in foreign policy; | |
• | political uncertainty or increasing strife among or within political parties in Korea; | |
• | hostilities involving oil producing countries in the Middle East and any material disruption in the supply of oil or increase in the price of oil; and | |
• | an increase in the level of tension or an outbreak of hostilities between North Korea and Korea or the United States. |
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• | a registration statement filed by us under the Securities Act of 1933, as amended, is in effect with respect to those shares; or | |
• | the offering and sale of those shares is exempt from or is not subject to the registration requirements of the Securities Act. |
Item 4. | Information on the Company |
Item 4.A. | History and Development of the Company |
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206 Jungja-dong, Bundang-ku, Sungnam, Gyunggi-do, Korea, and our telephone number is(8231) 727-0114.
Item 4.B. | Business Overview |
• | telephone services, including local, domestic long-distance and international long-distance fixed-line telephone services and interconnection services to other telecommunications companies; | |
• | broadband Internet access service and other Internet-related services, includingIP-TV services; | |
• | PCS mobile telecommunications service and third-generation HSDPA-based IMT-2000 wireless Internet and video multimedia communications services; and | |
• | various other services, including leased line service and other data communication service, satellite service and information technology and network services. |
• | We are currently the dominant provider of fixed-line telephone services in Korea with approximately 26.0 million installed lines, of which 18.9 million lines were in service as of December 31, 2008. As of December 31, 2008, our market share of the local market was 89.8% based on the number of local fixed-line subscribers announced by the Korea Communications Commission. Based on number of subscribers in 2008 announced by the Korea Communications Commission, our market share of the domestic long-distance market was 85.2%; | |
• | We are Korea’s largest broadband Internet access provider in terms of subscribers, with 6.7 million subscribers as of December 31, 2008, representing a market share of 43.4% in Korea based on the number of Internet subscribers announced by the Korea Communications Commission; | |
• | We are Korea’s second largest mobile telecommunications service provider. We had approximately 14.4 million subscribers (including our resale subscribers) as of December 31, 2008, representing a market share of 31.5% of the total mobile service market in Korea based on the number of mobile subscribers announced by the Korea Communications Commission; and | |
• | We are also the leading provider of data communication service in Korea. |
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As of December 31, | ||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | ||||||||||||||||
Total Korean Population(1) | 48,199 | 48,294 | 48,378 | 48,457 | 48,607 | |||||||||||||||
Mobile Subscribers(2) | 36,586 | 38,342 | 40,197 | 43,498 | 45,607 | |||||||||||||||
Mobile Subscriber Growth Rate | 8.9 | % | 4.8 | % | 4.8 | % | 8.2 | % | 4.9 | % | ||||||||||
Mobile Penetration(3) | 75.9 | % | 79.4 | % | 83.1 | % | 89.8 | % | 93.8 | % |
(1) | In thousands, based on population trend estimates by the National Statistical Office of Korea. | |
(2) | In thousands, based on information announced by the Korea Communications Commission. | |
(3) | Penetration is determined by dividing mobile subscribers by total Korean population. |
• | Home Customer Group. We aim to offer a one-stop-shop that satisfies various information technology and telecommunications needs of a household. In March 2009, we launched a new brand “QOOK” to promote our bundled products, which include broadband Internet access service,IP-TV service, Internet phone service and fixed-line telephone service. We aim to differentiate ourselves from our competitors by providing broadband Internet access service using high-speed fiber-to-the-home (or FTTH) connection and offering Internet phone service with value-added features such as video communication, short message service and phone banking. We also began offering real-time broadcasting service on ourIP-TV service starting in November 2008. | |
• | Personal Customer Group. We believe that Internet browsing services using open platform operating systems encourage development of more innovative mobile data communication applications and enhance the Internet browsing experience of mobile subscribers. Our Personal Customer Group plans to focus on upgrading our mobile services to be based on such open platform operating systems, which we believe will lead to greater customer satisfaction and business opportunities. In addition, we aim to further enhance our position in the mobile telecommunications market by leveraging on KT’s strong brand, nationwide marketing network and ability to bundle fixed-line and mobile services. |
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• | Enterprise Customer Group. For our enterprise customers, we plan to upgrade our services from traditional network-related services such as leased lines and private branch exchange services to infrastructure management outsourcing services, in which we offer a wide range of services from designing and implementing data communications and information technology infrastructure to overseeing their day-to-day operations, including network management, help desk operations, data center operations and applications management. We believe that such outsourcing services will enable our enterprise customers to achieve operational efficiencies and cost savings. | |
• | Convergence. We believe that convergence of fixed-line and mobile communications technologies will provide a competitive advantage to us because we have the technological know-how and experience to design and construct a unified delivery platform for a new generation of value-added services. We plan to make such platform be readily available to others so that they may create additional contents and convenience solutions such as electronic commerce and digital transaction applications that can be utilized anywhere using various media and communications devices. | |
• | Diversification. We aim to carefully seek out promising new opportunities to diversify our revenue base. Technological developments have enhanced the coverage area of individual telecommunications facilities, which enable us to better utilize our existing land and other real estate holdings through property development. Other revenue diversification strategies include (i) leveraging our extensive customer base and expertise in telemetering technology to enhance our position in the security surveillance market, (ii) selectively entering into alternative energy generation businesses, such as geothermal or solar energy, by utilizing our accumulated knowledge and resources in the power management field, and (iii) selectively pursuing investment opportunities abroad, primarily in emerging economies with high growth potential for telecommunications and data communications services. |
As of or for the Year Ended December 31, | ||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | ||||||||||||||||
Total Korean Population(1) | 48,199 | 48,294 | 48,378 | 48,457 | 48,607 | |||||||||||||||
Lines installed (thousands)(2) | 25,577 | 26,190 | 26,838 | 26,671 | 26,008 | |||||||||||||||
Lines in service (thousands)(2) | 21,091 | 20,837 | 20,331 | 19,980 | 18,883 | |||||||||||||||
Lines in service per 100 inhabitants(3) | 43.8 | 43.1 | 42.0 | 41.2 | 38.8 | |||||||||||||||
Fiber optic cable (kilometers) | 157,707 | 167,857 | 212,715 | 267,421 | 312,232 | |||||||||||||||
Number of public telephones installed (thousands) | 317 | 267 | 218 | 185 | 161 | |||||||||||||||
Domestic long-distance call minutes (millions)(4)(5) | 14,826 | 13,417 | 14,769 | 13,375 | 11,591 | |||||||||||||||
Local call pulses (millions)(4) | 20,585 | 18,566 | 16,182 | 14,676 | 12,449 |
(1) | In thousands, based on population trend estimates by the National Statistical Office of Korea. | |
(2) | Including lines used for public telephones but excluding lines dedicated to centralized extension system services for corporate subscribers. | |
(3) | Determined based on lines in service and total Korean population. | |
(4) | Excluding calls placed from public telephones. | |
(5) | Estimated by KT Corporation. |
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Year Ended December 31, | ||||||||||||||||||||
2004 | 2005 | 2006 | 2007 | 2008 | ||||||||||||||||
(In millions of billed minutes) | ||||||||||||||||||||
Incoming international long-distance calls | 569.8 | 558.9 | 519.4 | 627.4 | 603.7 | |||||||||||||||
Outgoing international long-distance calls | 527.4 | 467.8 | 400.9 | 431.4 | 398.1 | |||||||||||||||
Total | 1,097.2 | 1,026.7 | 920.3 | 1,058.8 | 1,001.8 | |||||||||||||||
• | xDSL, Ethernet and FTTH services under the “QOOK Internet” (formerly, “Megapass”) brand name; |
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• | wireless LAN service under the “Nespot” brand name, which is designed to integrate fixed-line and wireless services by offering high speed wireless Internet access to laptops and PDAs in hot-spot zones and QOOK Internet service in fixed-line environments; and | |
• | WiBro Internet access service, which enables two-way wireless broadband Internet access to portable computers, mobile phones and other portable devices at a speed averaging 1 Mbps per user. |
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As of or for the Year Ended December 31, | ||||||||||||
2006 | 2007 | 2008 | ||||||||||
Outgoing Minutes (in thousands)(1) | 19,763,593 | 20,407,676 | 22,144,588 | |||||||||
Average Monthly Outgoing Minutes per Subscriber(1)(2) | 164 | 161 | 164 | |||||||||
Average Monthly Revenue per Subscriber(1)(3) | 38,768 | 39,852 | 40,270 | |||||||||
Number of Subscribers (in thousands)(4) | 12,914 | 13,721 | 14,365 |
(1) | Not including figures related to resale subscribers of KT Corporation. | |
(2) | The average monthly outgoing minutes per subscriber is computed by dividing the total minutes of usage for the period by the weighted average number of subscribers for the period and dividing the quotient by the number of months in the period. The weighted average number of subscribers is the sum of the total number of subscribers at the end of each month divided by the number of months in the period. | |
(3) | The average monthly revenue per subscriber is computed by dividing total monthly fees, usage charges, interconnection fees and value-added service fees for the period by the weighted average number of subscribers and dividing the quotient by the number of months in the period. | |
(4) | Includes resale subscribers of KT Corporation who utilized KTF’s network. KT Corporation had approximately 2.8 million resale subscribers as of December 31, 2008. |
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Year Ended December 31, | ||||||||||||
2006 | 2007 | 2008 | ||||||||||
Telephone services: | ||||||||||||
Local service | 16.3 | % | 15.3 | % | 14.0 | % | ||||||
Non-refundable service initiation fees | 0.3 | 0.2 | 0.1 | |||||||||
Domestic long-distance service | 4.0 | 3.6 | 3.0 | |||||||||
International long-distance service | 2.2 | 2.3 | 2.2 | |||||||||
Land-to-mobile interconnection | 10.0 | 8.5 | 7.1 | |||||||||
Sub-total | 32.8 | 29.9 | 26.4 | |||||||||
Internet services: | ||||||||||||
Broadband Internet access service | 12.1 | 11.1 | 10.4 | |||||||||
Other Internet-related services(1) | 1.8 | 2.3 | 3.2 | |||||||||
Sub-total | 13.9 | 13.4 | 13.6 | |||||||||
Mobile service | 30.9 | 31.5 | 31.9 | |||||||||
Sales of goods(2) | 10.6 | 12.5 | 14.6 | |||||||||
Data communications service | 7.2 | 6.8 | 6.8 | |||||||||
Miscellaneous services(3) | 4.6 | 5.9 | 6.7 | |||||||||
Operating revenues | 100.0 | % | 100.0 | % | 100.0 | % | ||||||
(1) | Includes revenues from Kornet Internet connection service and services provided by our Internet data centers, Bizmeka and QOOK TV. | |
(2) | Includes mobile handset sales. | |
(3) | Includes revenues from information technology and network services and real estate development. |
• | Service initiation fees for new lines; | |
• | Monthly basic charges; and | |
• | Monthly usage charges based on the number of call pulses. |
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Dec 1, | Sept 1, | April 15, | May 1, | |||||||||||||
1996 | 1997 | 2001 | 2002 | |||||||||||||
Local Usage Charges (per pulse)(1) | ||||||||||||||||
Regular service | 41.6 | 45 | 39 | 39 | ||||||||||||
Public telephone | 40 | 50 | 50 | 70 |
(1) | Since January 1, 1990, usage charges for local service in those metropolitan areas subject to measured service have been based on the number of pulses, which are a function of the duration and number of calls, and per pulse rates. Before January 1, 1993, in areas not subject to measured service, a pulse was triggered once for each local telephone call, regardless of the length of the call. Commencing January 1, 1993, measured service applies to all lines in service. A pulse is triggered at the beginning of each local call and every three minutes thereafter from 8:00 a.m. to 9:00 p.m. on weekdays and every 258 seconds thereafter on holidays and from 9:00 p.m. to 8:00 a.m. on weekdays. |
Rates from September 1998 to April 14, 2001 | Original Plan | Second Plan | ||
Service Initiation Deposit (refunded upon termination of service) | Between | None | ||
Non-refundable Service Initiation Fee | ||||
Monthly Basic Charge | Between | Between |
Rates Starting April 15, 2001 | New Plan | |
Service initiation Deposit (refunded upon termination of service) | None | |
Non-refundable Service Initiation Fee | ||
Monthly Basic Charge | Between |
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Date of Rate Change(1) | ||||||||||||||||||||
Dec. 1, | Sept. 1, | Dec. 1, | April 15, | Nov. 1, | ||||||||||||||||
1996 | 1997 | 2000 | 2001 | 2001 | ||||||||||||||||
Domestic Long-Distance Charges (per three minutes)(1)(2) | ||||||||||||||||||||
Up to 30 km | 41.6 | 45 | 45 | 39 | 39 | |||||||||||||||
Up to 100 km | 182 | 172 | 192 | 192 | 261 | |||||||||||||||
100 km or longer | 277 | 245 | 252 | 252 | 261 |
(1) | Domestic long-distance calls of up to 30 kilometers are billed on the same basis as local calls. Before April 15, 2001, for domestic long-distance calls in excess of 30 kilometers, a pulse was triggered at the beginning of each call and every 47 seconds for calls up to 100 kilometers or every 33 seconds for calls in excess of 100 kilometers. Commencing April 15, 2001, a pulse was triggered at the beginning of each call and every 30 seconds thereafter. Commencing November 1, 2001, a pulse is triggered at the beginning of each call and every 10 seconds thereafter. | |
(2) | Rates for domestic long-distance calls in excess of 30 kilometers are currently discounted (by an adjustment in the period between pulses) by 10% on holidays and from 6:00 a.m. to 8:00 a.m. on weekdays, and by 30% from midnight to 6:00 a.m. every day. |
• | starting in September 2006, a subscriber who elects to pay the monthly average of the past six months of local and domestic long-distance usage amounts plus an extra monthly change of | |
• | starting in November 2007, a subscriber who elects to pay an additional monthly flat rate of | |
• | starting in November 2007, a subscriber who elects to pay an additional monthly flat rate of | |
• | starting in June 2008, a subscriber who elects to pay a monthly flat rate of |
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• | amounts we bill to customers for outgoing calls made to foreign countries (including customers who make calls to Korea from foreign countries under our home country direct-dial service); | |
• | amounts we bill to foreign telecommunications carriers and administrations for connection to the Korean telephone network in respect of incoming calls (including calls placed in Korea by customers of the foreign carriers for home country direct-dial service); and | |
• | other revenues, including revenues from international calls placed from public telephones. |
Effective Starting | ||||||||||||||||
January 1, | January 1, | January 1, | January 1, | |||||||||||||
2006 | 2007 | 2008 | 2009 | |||||||||||||
SK Telecom | 33.1 | 32.8 | 33.4 | 33.4 | ||||||||||||
KTF | 40.1 | 39.6 | 38.7 | 38.7 | ||||||||||||
LG Telecom | 47.0 | 45.1 | 39.1 | 39.1 |
Effective Starting | ||||||||||||
May 1, | July 1, | September 1, | ||||||||||
2002 | 2003 | 2004 | ||||||||||
Weekday | 93.8 | 89.0 | 87.0 | |||||||||
Weekend | 88.9 | 84.0 | 82.0 | |||||||||
Evening(1) | 83.9 | 79.2 | 77.2 |
(1) | Evening rates are applicable from 12:00 a.m. to 6:00 a.m. everyday. |
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Effective Starting | ||||||||||||||||
January 1, | January 1, | January 1, | January 1, | |||||||||||||
2006 | 2007 | 2008 | 2009 | |||||||||||||
Local access(1) | 16.6 | 17.3 | 18.3 | 18.1 | ||||||||||||
Single toll access(2) | 18.2 | 19.0 | 19.5 | 19.3 | ||||||||||||
Double toll access(3) | 19.9 | 20.7 | 20.6 | 20.4 |
(1) | Interconnection between local switching center and local access line. | |
(2) | Interconnection involving access to single long-distance switching center. | |
(3) | Interconnection involving access to two long-distance switching centers. |
Maximum Speed | Monthly Fee(1) | |||||||
QOOK Internet Special | 100 | Mbps | 36,000 | |||||
QOOK Internet Lite | 50 | 30,000 | ||||||
WiBro Slim(2)(6) | 3 | 10,000 | ||||||
WiBro Basic(3)(6) | 3 | 20,000 | ||||||
WiBro Special(4)(6) | 3 | 30,000 | ||||||
WiBro Premium(5)(6) | 3 | 40,000 |
(1) | We provide discounts of up to 15.0% for mandatory subscription periods ranging from one to three years. | |
(2) | We charge a monthly fee of | |
(3) | We charge a monthly fee of | |
(4) | We charge a monthly fee of | |
(5) | We charge a monthly fee of | |
(6) | In order to promote our WiBro service, we are currently offering promotional rates to all new customers subscribing before June 30, 2009. New subscribers may elect either flat rate plans in which the subscriber pays |
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either a monthly fee of |
• | initial subscription fees; | |
• | monthly fees; | |
• | usage charges for outgoing calls; | |
• | usage charges for wireless data transmission; | |
• | contents download fees; and | |
• | value-added monthly service fees. |
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Usage Charge Discounts | ||||||||||||||
Monthly Rates | Between | Calls to | ||||||||||||
Off-Line | Mobile | Family | Designated | |||||||||||
Flat Rate(1) | Monthly Fee | Members | Numbers(2) | |||||||||||
Internet / Internet Phone / Mobile | 25,000 | Discounts of between | 50% | 20% | ||||||||||
Internet / Fixed-Line Phone / Mobile | 27,000 | 10% to 50%, subject to | 50% | 20% | ||||||||||
Internet /IP-TV / Mobile | 29,000 | the number of subscribers | 50% | 20% | ||||||||||
Internet / Internet Phone /IP-TV / Mobile | 30,000 | who participate (up to | 50% | 50% | ||||||||||
Internet / Fixed-Line Phone /IP-TV / Mobile | 32,000 | 5 mobile numbers) | 50% | 50% |
(1) | Assuming QOOK Internet Lite service. If QOOK Internet Special is selected, additional monthly charge of | |
(2) | Limited to one designated mobile number and one designated fixed-line number. |
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Market Share (%) | ||||||||||||
KT | SK | LG | ||||||||||
Corporation | Broadband | DACOM | ||||||||||
December 31, 2006 | 92.1 | 7.5 | 0.4 | |||||||||
December 31, 2007 | 90.4 | 8.8 | 0.8 | |||||||||
December 31, 2008 | 89.8 | 8.7 | 1.5 |
Market Share (%) | ||||||||||||||||||||
KT | LG | SK | ||||||||||||||||||
Corporation | DACOM | Broadband | Onse | SK Telink | ||||||||||||||||
2006 | 85.6 | 6.1 | 4.8 | 2.1 | 1.4 | |||||||||||||||
2007 | 85.4 | 7.4 | 3.9 | 1.8 | 1.5 | |||||||||||||||
2008 | 85.2 | 7.8 | 3.7 | 1.7 | 1.6 |
KT | SK | LG | ||||||||||||||||||
Corporation | Broadband | DACOM | Onse | SK Telink | ||||||||||||||||
30 kilometers or longer | 261 | 250 | 253 | 248 | 248 |
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KT | SK | LG | SK | |||||||||||||||||
Corporation | Broadband | DACOM | Onse | Telink | ||||||||||||||||
United States | 282 | 276 | 288 | 276 | 156 | |||||||||||||||
Japan | 696 | 672 | 678 | 672 | 384 | |||||||||||||||
China | 990 | 984 | 996 | 984 | 780 | |||||||||||||||
Australia | 1,086 | 1,044 | 1,086 | 1,044 | 528 | |||||||||||||||
Great Britain | 1,008 | 966 | 996 | 966 | 498 | |||||||||||||||
Germany | 948 | 912 | 942 | 912 | 402 |
Market Share (%) | ||||||||||||||||
KT | SK | LG | ||||||||||||||
Corporation | Broadband | Powercomm | Others | |||||||||||||
December 31, 2006 | 45.2 | 25.7 | 8.6 | 20.5 | ||||||||||||
December 31, 2007 | 44.3 | 24.9 | 11.7 | 19.1 | ||||||||||||
December 31, 2008 | 43.4 | 22.9 | 14.1 | 19.6 |
KT | SK | LG | Cable | |||||||||||||
Corporation | Broadband | Powercomm | Providers(1) | |||||||||||||
Monthly subscription fee | 25,500 | 25,200 | 25,000 | 19,600 | ||||||||||||
Monthly modem rental fee | 3,000 | 3,000 | — | 3,000 | ||||||||||||
Additional installation fee upon moving | 10,000 | 10,000 | 20,000 | varies |
(1) | These are fees typically charged by cable providers. |
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Market Share (%) | ||||||||||||
KTF | SK Telecom | LG Telecom | ||||||||||
December 31, 2006 | 32.1 | 50.4 | 17.4 | |||||||||
December 31, 2007 | 31.5 | 50.5 | 18.0 | |||||||||
December 31, 2008 | 31.5 | 50.5 | 18.0 |
Market Share (%) | ||||||||
KTF | SK Telecom | |||||||
December 31, 2007 | 56.2 | 43.8 | ||||||
December 31, 2008 | 50.1 | 49.9 |
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• | network service providers, such as us, which typically provide telecommunications services with their own telecommunications networks and related facilities. Their services may include local, domestic long-distance and international long-distance telephone services, mobile communications service, paging service and trunked radio system service; | |
• | value-added service providers, which provide telecommunications services other than those services specified for network service providers, such as data communications using telecommunications facilities leased from network service providers; and | |
• | specific service providers, which may occupy a middle ground between network service providers and value-added service providers and are broadly defined by law as telecommunications service providers that provide network services using the telecommunications network facilities or services of network service providers. |
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• | engage in certain businesses specified in the Presidential Decree under the Telecommunications Business Act, such as the telecommunications equipment manufacturing business and the telecommunications network construction business; | |
• | change the conditions for its licenses; | |
• | transfer, terminate, suspend or spin off all or a part of the business for which it is licensed; | |
• | acquire all or a part of the business of another network service provider; or | |
• | enter into a merger with another network service provider. |
• | formulating the basic plan for the telecommunications industry; and | |
• | preparing periodic reports to the National Assembly of Korea regarding developments in the telecommunications industry. | |
• | The responsibilities of the Ministry of Knowledge Economy include: | |
• | drafting and implementing plans for developing telecommunications technology; | |
• | fostering and providing guidance to institutions and entities that conduct research relating to telecommunications; and | |
• | recommending to network service providers that they invest in research and development or that they contribute to telecommunications research institutes in Korea. |
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Item 4.C. | Organizational Structure |
Item 4.D. | Property, Plants and Equipment |
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• | cell sites, which are physical locations equipped with base transceiver stations consisting of transmitters, receivers and other equipment used to communicate through radio channels with subscribers’ mobile telephone handsets within the range of a cell; | |
• | base station controllers, which connect to and control, the base transceiver stations; | |
• | mobile switching centers, which in turn control the base station controllers and the routing of telephone calls; and | |
• | transmission lines, which connect the mobile switching centers, base station controllers, base transceiver stations and the public switched telephone network. |
CDMA | W-CDMA | |||||||
Mobile switching centers | 42 | 22 | ||||||
Base station controllers | 397 | 219 | ||||||
Base transceiver stations | 10,750 | 6,997 | ||||||
Indoor and outdoor repeaters | 47,450 | 196,587 |
• | a 2.3% interest in the 12,083-kilometer Asia Pacific Cable Network connecting Korea, Japan and Hong Kong with six Southeast Asian countries and Australia, activated since January 1997; | |
• | a 1.4% interest in the 29,000-kilometer FLAG Europe-Asia network connecting Korea, Southeast Asia, the Middle East and Europe, activated since April 1997; | |
• | a 1.9% interest in the 39,000-kilometer Southeast Asia-Middle East-Western Europe 3 Cable Network linking 34 countries, activated since December 1999; | |
• | a 6.7% interest in the 30,444-kilometer China-U.S. Cable Network linking Korea, China, Japan, Taiwan and the United States, activated since January 2000; | |
• | a 2.5% interest in the 19,000-kilometer Asia Pacific Cable Network 2 connecting Korea, China, Japan, Taiwan, Hong Kong, Philippines, Singapore and Malaysia, activated since December 2001; | |
• | a 20.0% interest in the500-kilometer Korea-Japan Cable Network linking Korea and Japan, activated since March 2002.; and | |
• | a 13.1% interest in the 16,500-kilometer Trans Pacific Express Cable Network linking Korea, China, Taiwan and the United States, activated since September 2008. |
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Item 4A. | Unresolved Staff Comments |
Item 5. | Operating and Financial Review and Prospects |
Item 5.A. | Operating Results |
Year Ended December 31, | ||||||||||||||||||||||||
2006 | 2007 | 2008 | ||||||||||||||||||||||
(Percentage | (Percentage | (Percentage | ||||||||||||||||||||||
of | of | of | ||||||||||||||||||||||
(In | consolidated | (In | consolidated | (In | consolidated | |||||||||||||||||||
billions of | operating | billions of | operating | billions of | operating | |||||||||||||||||||
Won) | revenues) | Won) | revenues) | Won) | revenues) | |||||||||||||||||||
Operating revenues: | ||||||||||||||||||||||||
Telephone services: | ||||||||||||||||||||||||
Local service | 2,909 | 16.3 | % | 2,856 | 15.3 | % | 2,752 | 14.0 | % | |||||||||||||||
Non-refundable service installation fees | 46 | 0.3 | 43 | 0.2 | 28 | 0.1 | ||||||||||||||||||
Domestic long-distance service | 711 | 4.0 | 673 | 3.6 | 587 | 3.0 | ||||||||||||||||||
International long-distance service | 386 | 2.2 | 432 | 2.3 | 442 | 2.2 | ||||||||||||||||||
Land-to-mobile interconnection | 1,765 | 10.0 | 1,588 | 8.5 | 1,391 | 7.1 | ||||||||||||||||||
Sub-total | 5,817 | 32.8 | 5,592 | 29.9 | 5,200 | 26.4 | ||||||||||||||||||
Internet services: | ||||||||||||||||||||||||
Broadband Internet access service | 2,149 | 12.1 | 2,074 | 11.1 | 2,050 | 10.4 | ||||||||||||||||||
Other Internet-related services(1) | 322 | 1.8 | 424 | 2.3 | 629 | 3.2 | ||||||||||||||||||
Sub-total | 2,471 | 13.9 | 2,498 | 13.4 | 2,679 | 13.6 | ||||||||||||||||||
Mobile service | 5,510 | 30.9 | 5,875 | 31.5 | 6,261 | 31.9 | ||||||||||||||||||
Sale of goods(2) | 1,889 | 10.6 | 2,324 | 12.5 | 2,867 | 14.6 | ||||||||||||||||||
Data communication service(3) | 1,284 | 7.2 | 1,271 | 6.8 | 1,336 | 6.8 | ||||||||||||||||||
Miscellaneous services(4) | 854 | 4.6 | 1,100 | 5.9 | 1,302 | 6.7 | ||||||||||||||||||
Total operating revenues | 17,825 | 100.0 | 18,660 | 100.0 | % | 19,645 | 100.0 | % | ||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Salaries and related costs | 2,993 | 16.8 | 3,133 | 16.8 | 3,214 | 16.4 | ||||||||||||||||||
Depreciation and amortization | 3,557 | 20.0 | 3,602 | 19.3 | 3,630 | 18.5 | ||||||||||||||||||
Other operating and maintenance(5) | 8,892 | 49.9 | 10,180 | 54.6 | 11,373 | 57.9 | ||||||||||||||||||
Total operating expenses | 15,442 | 86.7 | 16,915 | 90.6 | % | 18,217 | 92.7 | % | ||||||||||||||||
Operating income | 2,383 | 13.3 | % | 1,745 | 9.4 | % | 1,428 | 7.3 | % |
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(1) | Includes revenues from Kornet Internet connection service and services provided by our Internet data centers, Bizmeka and QOOK TV. | |
(2) | Includes mobile handset sales. | |
(3) | Includes revenues from satellite service. | |
(4) | Includes revenues from information technology and network services and real estate development. | |
(5) | For a breakdown of other operating and maintenance expenses, see “— Item 5.A. Operating Results — Other Operating and Maintenance Expenses.” |
• | merger of KTF into KT Corporation on June 1, 2009; | |
• | IMT-2000 service license payments; | |
• | changes in the rate structure for our services; | |
• | developing and launching WiBro service; and | |
• | deployment of FTTH. |
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• | allowances for doubtful accounts; | |
• | useful lives of property, plant and equipment; | |
• | impairment of long-lived assets, including the IMT-2000 frequency usage right; | |
• | impairment of investment securities; | |
• | income taxes; and | |
• | valuation of derivatives. |
Year Ended December 31, | ||||||||||||
2006 | 2007 | 2008 | ||||||||||
(In millions of Won) | ||||||||||||
Balance at beginning of year | 613,873 | 563,164 | 487,729 | |||||||||
Provision | 111,285 | 71,502 | 150,583 | |||||||||
Write-offs | (161,994 | ) | (146,937 | ) | (149,573 | ) | ||||||
Balance at end of year | 563,164 | 487,729 | 488,739 | |||||||||
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• | amounts we bill to our customers for outgoing calls made to foreign countries (including customers who make calls to Korea from foreign countries under our home country direct-dial service); | |
• | amounts we bill to foreign telecommunications carriers and administrations for connection to the Korean telephone network in respect of incoming calls (including calls placed in Korea by customers of the foreign carriers for home country direct-dial service); | |
• | amounts we charge to fixed-line competitors, mobile service providers and voice resellers as interconnection fees for using our international network in providing their services; and | |
• | other revenues, including revenues from international calls placed from public telephones and international leased lines. |
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• | initial subscription fees; | |
• | monthly fees; | |
• | usage charges for outgoing calls; | |
• | usage charges for wireless data transmission; | |
• | contents download fees; and | |
• | value-added monthly service fees. |
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Year Ended December 31, | Percentage Changes | |||||||||||||||||||
2006 | 2007 | 2008 | 2006 vs 2007 | 2007 vs 2008 | ||||||||||||||||
(In billions of Won) | ||||||||||||||||||||
Cost of goods sold | 1,682 | 1,912 | 2,367 | 13.7 | % | 23.8 | % | |||||||||||||
Sales commission | 1,348 | 1,902 | 2,130 | 41.1 | 12.0 | |||||||||||||||
Commissions and cost of services | 1,648 | 1,925 | 2,015 | 16.8 | 4.7 | |||||||||||||||
Interconnection charge | 1,178 | 1,200 | 1,234 | 1.9 | 2.8 | |||||||||||||||
Promotion expenses | 561 | 749 | 1,080 | 33.5 | 44.1 | |||||||||||||||
Repairs and maintenance | 705 | 611 | 580 | (13.3 | ) | (5.0 | ) | |||||||||||||
Miscellaneous expenses | 1,769 | 1,881 | 1,967 | 6.3 | 4.6 | |||||||||||||||
Total | 8,891 | 10,180 | 11,373 | 14.5 | % | 11.7 | % | |||||||||||||
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• | We recorded a net loss on foreign exchange translation and transaction of | |
• | Our net gain on disposal of available-for-sale securities decreased by 88.4% in 2007 to | |
• | We recorded a net gain on valuation and settlement of derivatives of | |
• | We recorded a gain of | |
• | Our interest income increased by 39.2% in 2007 to |
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• | We recorded a significant increase in net loss on foreign exchange translation and transaction to | |
• | We recorded a decrease of 92.0% in reversal of accrued provisions to |
Item 5.B. | Liquidity and Capital Resources |
For the Years Ended December 31, | ||||||||||||
2006 | 2007 | 2008 | ||||||||||
(In billions of Won) | ||||||||||||
Net cash provided by operating activities | 5,714 | 4,265 | 2,919 | |||||||||
Net cash used in investing activities | (3,061 | ) | (3,449 | ) | (3,531 | ) | ||||||
Net cash provided by (used in) financing activities | (2,367 | ) | (1,368 | ) | 1,051 | |||||||
Cash and cash equivalents at beginning of period | 1,547 | 1,829 | 1,385 | |||||||||
Cash and cash equivalents at end of period | 1,829 | 1,385 | 1,891 | |||||||||
Net increase (decrease) in cash and cash equivalents | 282 | (444 | ) | 506 |
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Payments Due by Period | ||||||||||||||||||||
Less than | 1-3 | 4-5 | After 5 | |||||||||||||||||
Contractual Obligations(1)(2) | Total | 1 Year | Years | Years | Years | |||||||||||||||
(In billions of Won) | ||||||||||||||||||||
Long-term debt obligations (including current portion of long-term debt) | 9,431 | 1,441 | 3,777 | 1,970 | 2,243 | |||||||||||||||
Capital lease obligations | 19 | 11 | 8 | — | — | |||||||||||||||
Operating lease obligations | 1 | 1 | — | — | — | |||||||||||||||
Severance payment obligations | 1,709 | 6 | 29 | 71 | 1,603 | |||||||||||||||
Long-term accounts payable — others | 450 | 130 | 320 | — | — | |||||||||||||||
Total | 11,610 | 1,589 | 4,134 | 2,041 | 3,846 | |||||||||||||||
Estimate of interest payment based on contractual interest rates effective as of December 31, 2008 | 1,929 | 492 | 688 | 364 | 385 | |||||||||||||||
(1) | Contractual obligations represent contractual liabilities as of the consolidated balance sheet date excluding refundable deposits for telephone installation and accruals for customer call bonus points, which do not have definitive payment schedules. | |
(2) | Excluding a put and call combination contract we entered into with Woori Investment & Securities Co., Ltd. On December 26, 2008, Woori Investment & Securities, which acquired shares of the Korea Digital Satellite Broadcasting Co., Ltd. from JP Morgan Whitefriars Inc., and we entered into a put and call combination contract. Under this contract, we may exercise a call option to acquire 9.2 million shares of the Korea Digital Satellite Broadcasting from Woori Investment & Securities during the period from December 26, 2009 to December 26, 2011, and Woori Investment & Securities has the option to exercise a put option on such shares to us on December 26, 2011. The exercise price under the contract for both parties is |
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As of December 31, | ||||||||||||
2006 | 2007 | 2008 | ||||||||||
(In billions of Won) | ||||||||||||
Cash and cash equivalents | 1,829 | 1,385 | 1,891 | |||||||||
Short-term investment assets | 671 | 460 | 417 | |||||||||
Accounts receivable — trade | 2,543 | 2,621 | 3,015 | |||||||||
Inventories | 237 | 299 | 425 |
As of December 31, | ||||||||||||
2006 | 2007 | 2008 | ||||||||||
(In billions of Won) | ||||||||||||
Accounts payable — trade | 773 | 1,020 | 834 | |||||||||
Short-term borrowings | 185 | 226 | 274 | |||||||||
Current portion of bonds and long-term borrowings | 1,353 | 1,020 | 1,440 | |||||||||
Accounts payable — other | 1,708 | 1,442 | 1,476 | |||||||||
Accrued expenses | 422 | 484 | 528 |
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• | Approximately | |
• | Approximately | |
• | Approximately | |
• | Approximately | |
• | Approximately | |
• | Approximately |
• | the difference in the treatment of minority interests; | |
• | the difference in the treatment of impairment loss relating to equity investees; | |
• | the difference in the treatment of depreciation; and | |
• | the difference in the treatment of deferred service installation fees, |
• | other differences in the treatment of equity in earnings of equity method affiliates; and | |
• | the aggregate effect of deferred income taxes recognized under U.S. GAAP. |
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Item 5.C. | Research and Development, Patents and Licenses, Etc. |
• | a future technology laboratory; | |
• | a platform laboratory; | |
• | an infrastructure laboratory; | |
• | a marketing laboratory; and | |
• | a network technology laboratory. |
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• | fixed mobile multimedia convergence solutions including WiBro, femtocell mobileIP-TV, mobile VoIP; | |
• | VoIP solutions and related value-added services; | |
• | future network structures and solutions; | |
• | next generation wireless Internet evolution technologies such as WiBro, HSDPA and femtocell; | |
• | platform and application services forIP-TV services; and | |
• | network technologies for backbone and access network including FTTH solutions. |
Item 5.D. | Trend Information |
Item 5.E. | Off-balance Sheet Arrangements |
Item 5.F. | Tabular Disclosure of Contractual Obligations |
Item 5.G. | Safe Harbor |
Item 6. | Directors, Senior Management and Employees |
Item 6.A. | Directors and Senior Management |
• | up to three standing directors, including the President; and | |
• | up to eight outside directors. |
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Expiration | ||||||||||
Director | of Term | |||||||||
Name | Position | Since | Date of Birth | of Office | ||||||
Standing Directors(1) | ||||||||||
Suk-Chae Lee | Chief Executive Officer | January 2009 | September 11, 1945 | 2012 | ||||||
Sang-Hoon Lee | President | March 2009 | January 24, 1955 | 2010 | ||||||
Hyun-Myung Pyo | Senior Executive Vice President | March 2009 | October 21, 1958 | 2010 | ||||||
Outside Directors(1) | ||||||||||
E. Han Kim | Chairperson of the Board of Directors, Chair Professor, University of Michigan | March 2009 | May 27, 1946 | 2012 | ||||||
Jeong-Suk Koh | Chief Executive Officer of Ilshin Investment Co., Ltd. | February 2008 | May 22, 1957 | 2011 | ||||||
Si-Chin Kang | Auditor, Catholic Education Foundation | January 2009 | September 15, 1947 | 2010 | ||||||
In-Man Song | Professor, Sungkyunkwan University | January 2009 | August 28, 1950 | 2010 | ||||||
Joon Park | Professor, Seoul National University | January 2009 | October 30, 1954 | 2011 | ||||||
Choon-Ho Lee | Professor, Inha University | March 2009 | July 22, 1945 | 2012 | ||||||
Jeung-Soo Huh | Professor, Kyungpook National University | March 2009 | June 10, 1960 | 2012 |
(1) | All of our standing and outside directors beneficially own less than one percent of the issued shares of KT Corporation in the aggregate. |
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• | all of our outside directors; | |
• | one person who is designated by the board of directors from among the ex-presidents; and | |
• | one civilian designated by outside directors, except former and present officers and employees of telecom carriers competing with us, their affiliates, our officers and employees and government officers. |
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Current | ||||||||||||
Position Held | Years with | |||||||||||
Name(1) | Title and Responsibilities | Since | the Company | Age | ||||||||
Ho-Ick Suk | Vice Chairman, Corporate Relations Group | June 2009 | — | 56 | ||||||||
Woo-Sik Kim | President, Personal Customer Group | June 2009 | 30 | 55 | ||||||||
Tae-Suk Roh | President, Home Customer Group | January 2009 | 30 | 54 | ||||||||
Sang-Hoon Lee | President, Enterprise Customer Group | January 2009 | 18 | 54 | ||||||||
Seong-Bok Jeong | President, Legal & Ethics Office | January 2009 | — | 54 | ||||||||
Doo-Whan Choi | President, Service Design Group | December 2006 | 18 | 55 | ||||||||
Sam-Soo Pyo | President, Technology Strategy Office | March 2009 | — | 55 | ||||||||
Hyun-Myung Pyo | Senior Executive Vice President, Corporate Center | February 2009 | 3 | 50 | ||||||||
Yu-Yeol Seo | Senior Executive Vice President, Group Shared Service Group | January 2009 | 31 | 52 | ||||||||
Sung-Man Kim | Senior Executive Vice President, Network Group | January 2009 | 26 | 52 | ||||||||
Soo-Ho Maeng | Senior Executive Vice President, Global Business Unit | January 2009 | 19 | 49 | ||||||||
Young-Whan Kim | Senior Executive Vice President, Corporate Relations Office | January 2009 | 26 | 51 | ||||||||
Han-Suk Kim | Senior Executive Vice President, Human Resource Office | January 2009 | 19 | 53 | ||||||||
Hyun-Mi Yang | Executive Vice President, Personal Customer Strategy Business Unit | June 2009 | — | 45 | ||||||||
Tae Jin Kang | Executive Vice President, Service Incubation Office | January 2009 | 1 | 49 | ||||||||
Jong-Ryul Seo | Executive Vice President, Media Business Unit | January 2009 | — | 49 | ||||||||
Tae-Gyoo Lee | Executive Vice President, Economics & Management Research Laboratory | June 2008 | 1 | 45 | ||||||||
Kyung-Soo Lee | Executive Vice President, Convergence WIBRO Business Unit | January 2009 | 17 | 49 | ||||||||
Yeon-Hak Kim | Executive Vice President, Financial Management Office | January 2009 | 22 | 47 | ||||||||
Tae-Yol Yoo | Executive Vice President, Economics & Management Research Laboratory | January 2009 | 25 | 49 | ||||||||
Gil-Joo Lee | Executive Vice President, Public Relations Office | November 2006 | 33 | 53 | ||||||||
Sang-Hong Lee | Executive Vice President, Central R&D Laboratory | January 2009 | 25 | 53 | ||||||||
Jeong-Tae Park | Executive Vice President, Purchasing Strategy Office | January 2009 | 25 | 49 | ||||||||
Tae-Il Park | Executive Vice President, Network Operation Business Unit | September 2005 | 31 | 53 | ||||||||
In-Sung Jeon | Executive Vice President, Real Assets Management Office | January 2009 | 29 | 50 | ||||||||
Gyoo-Taek Nam | Executive Vice President, Integrated Image Department | January 2009 | 23 | 48 | ||||||||
Sang-Heon Song | Senior Vice President, Customer Support Business Unit | January 2009 | 29 | 50 | ||||||||
Young-Hee Lee | Senior Vice President, Southern Seoul Corporate Business Center | January 2009 | 28 | 51 | ||||||||
Deok-Rae Lim | Senior Vice President, Cooperation TFT | January 2009 | 28 | 54 | ||||||||
Tae-Poong Kang | Senior Vice President, Northern Seoul Marketing Center | January 2009 | 29 | 54 | ||||||||
Kyung-Choon Shin | Senior Vice President, Southern Seoul Marketing Center | January 2009 | 29 | 54 | ||||||||
Dae-Jeon Roh | Senior Vice President, Northern Gyeonggi Marketing Center | January 2009 | 25 | 50 | ||||||||
Ok-Kie Lee | Senior Vice President, Southern Gyeonggi Marketing Center | May 2009 | 25 | 50 | ||||||||
Ouk-Jung Hwang | Senior Vice President, Incheon Marketing Center | January 2009 | 34 | 54 | ||||||||
In-Kyu Park | Senior Vice President, Daegu Marketing Center | January 2009 | 24 | 53 | ||||||||
Jong-Jin Chae | Senior Vice President, Small & Medium Business Business Unit | January 2009 | 23 | 47 | ||||||||
Seok-Joon Park | Senior Vice President, Northern Seoul Corporate Business Center | January 2009 | 28 | 51 | ||||||||
Kie-You Song | Senior Vice President, Southern Gyeonggi Corporate Business Center | January 2009 | 19 | 49 | ||||||||
Yoon-Hak Bang | Senior Vice President, Daejeon Corporate Business Center | January 2009 | 25 | 51 | ||||||||
Sung-Ho Myung | Senior Vice President, Jeonbuk Corporate Business Center | January 2009 | 25 | 51 | ||||||||
Young-Goon Yoo | Senior Vice President, Gangwon Corporate Business Center | January 2009 | 26 | 53 | ||||||||
Byoung-Seon Jeon | Senior Vice President, Chungbuk Corporate Business Center | January 2009 | 10 | 48 | ||||||||
Dong-Myun Lee | Senior Vice President, Service Support Office | January 2009 | 18 | 46 | ||||||||
Dong-Hoon Han | Senior Vice President, Technology Support Business Unit | November 2006 | 28 | 49 | ||||||||
Sun-Cheol Gweon | Senior Vice President, Network R&D Laboratory | January 2009 | 18 | 47 |
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Current | ||||||||||||
Position Held | Years with | |||||||||||
Name(1) | Title and Responsibilities | Since | the Company | Age | ||||||||
Ju-Ouk Uhm | Senior Vice President, Gangbuk Network O&M Center | January 2009 | 24 | 49 | ||||||||
Il-Sung Nam | Senior Vice President, Busan Network O&M Center | January 2009 | 26 | 54 | ||||||||
Dong-Hyun Han | Senior Vice President, CC Strategic Investment Department | January 2009 | 1 | 41 | ||||||||
Jae-Geun Choi | Senior Vice President, Legal Affairs TFT | March 2009 | — | 47 | ||||||||
Kyung-Lim Yoon | Senior Vice President, Contents TFT | January 2009 | 3 | 45 | ||||||||
Sun-Jong Heo | Senior Vice President, Corporate Relations Office | July 2006 | 3 | 50 | ||||||||
Sang-Jik Lee | Senior Vice President, Legal Affairs Department | June 2009 | — | 43 | ||||||||
Dae-San Lee | Senior Vice President, Mobile Network Business Unit | June 2009 | 22 | 48 | ||||||||
Jong-Seog Koh | Senior Vice President, Mobile R&D Laboratory | June 2009 | 20 | 49 | ||||||||
Tae-Hyo Ahn | Senior Vice President, Group Strategy CFT Corporate Strategy Department 2 | June 2009 | 24 | 47 | ||||||||
Hyun-Mun Lim | Senior Vice President, Personal Marketing Strategy Department | June 2009 | 22 | 48 | ||||||||
Seok-Gyoon Na | Senior Vice President, Personal Customer Business Business Unit | June 2009 | 12 | 50 | ||||||||
Bong-Goon Kwak | Senior Vice President, Mobile Data Business Business Unit | June 2009 | 24 | 49 | ||||||||
Seong-Mook Oh | Senior Vice President, Metropolitan Mobile Network O&M Center | June 2009 | 23 | 48 | ||||||||
Jong-Hack Kang | Senior Vice President, KT Sports | June 2009 | 24 | 50 | ||||||||
Choong-Seop Lee | Senior Vice President, Corporate Relations Department 2 | June 2009 | 13 | 50 | ||||||||
Jung-Sik Suh | Senior Vice President, Group Strategy CFT Corporate Strategy Department 1 | January 2009 | 2 | 39 | ||||||||
Hyung-Joon Kim | Senior Vice President, CC Corporate Planning Department | March 2009 | 15 | 45 | ||||||||
Sang-Cheon Shim | Senior Vice President, CC Corporate Synergy Department | January 2009 | 23 | 49 | ||||||||
Hyun-Mo Gu | Senior Vice President, CC Post Merger Integration Department | December 2007 | 22 | 45 | ||||||||
Yoon-Young Park | Senior Vice President, Home Customer Business Unit | January 2009 | 17 | 47 | ||||||||
Kwan-Young Jung | Senior Vice President, Youngdong Division | March 2009 | 23 | 48 | ||||||||
Sang-Choon Kim | Senior Vice President, Busan Marketing Center | January 2009 | 33 | 52 | ||||||||
Ho-Soo Song | Senior Vice President, Gyeongnam Marketing Center | January 2009 | 33 | 53 | ||||||||
Ouk-Young Yoo | Senior Vice President, Gyeongbuk Marketing Center | January 2009 | 34 | 52 | ||||||||
Yoon-Sik Jung | Senior Vice President, Enterprise Product Strategy Department | May 2009 | 1 | 44 | ||||||||
Seung-Dong Gye | Senior Vice President, Enterprise Customer Business Unit | January 2009 | 32 | 50 | ||||||||
Kyung-Seok Park | Senior Vice President, IMO Business Unit | December 2007 | 23 | 51 | ||||||||
Hyung-Oak Park | Senior Vice President, Gwangju Corporate Business Center | May 2009 | 36 | 54 | ||||||||
Yung-Sig Yoon | Senior Vice President, Gangnam Network O&M Center | January 2009 | 25 | 52 | ||||||||
Ju-Kyo Shim | Senior Vice President, Jungbu Network O&M Center | May 2009 | 28 | 50 | ||||||||
Chan-Kyung Park | Senior Vice President, Daegu Network O&M Center | January 2009 | 4 | 50 | ||||||||
Young-Lyoul Lee | Senior Vice President, Media Advertisement & Commerce Department | January 2009 | 2 | 46 | ||||||||
Pan-Sik Shin | Senior Vice President, Global Investment Department | November 2006 | 23 | 50 | ||||||||
Won-Sik Han | Senior Vice President, Financial Management Office | January 2009 | 24 | 48 | ||||||||
Bum-Joon Kim | Senior Vice President, Investor Relations Department | September 2005 | 4 | 44 | ||||||||
Jung-Won Park | Senior Vice President, Strategic Purchasing Department | January 2009 | 23 | 49 |
(1) | All of our executive officers beneficially own less than one percent of the issued shares of KT Corporation in the aggregate. |
Item 6.B. | Compensation |
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Item 6.C. | Board Practices |
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• | engaging independent auditors; | |
• | evaluating performance of independent auditors; | |
• | approving services to be provided by the independent auditors; | |
• | reviewing annual financial statements; | |
• | reviewing audit results and reports; | |
• | reviewing and evaluating our system of internal controls and policies; and | |
• | examining improprieties or suspected improprieties. |
Item 6.D. | Employees |
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Item 6.E. | Share Ownership |
Number of Common | ||||
Shareholders | Shares Owned | |||
Suk-Chae Lee | — | |||
Sang-Hoon Lee | 3,531 | |||
Hyun-Myung Pyo | 136 | |||
Jeong-Suk Koh | — | |||
Si-Chin Kang | — | |||
In-Man Song | — | |||
Joon Park | — | |||
E. Han Kim | — | |||
Choon-Ho Lee | — | |||
Jeung-Soo Huh | — |
Item 7. | Major Shareholders and Related Party Transactions |
Item 7.A. | Major Shareholders |
Percent | ||||||||
Number of | of Total | |||||||
Shareholders | Shares | Shares Issued | ||||||
Employee stock ownership association | 13,188,220 | 4.82 | % | |||||
National Pension Corporation | 16,179,637 | 5.92 | % | |||||
Directors as a group | 3,667 | 0.00 | % | |||||
Public | 172,663,772 | 63.12 | % | |||||
KT Corporation (held in the form of treasury stock)(1) | 71,500,404 | 26.14 | % | |||||
Total issued shares | 273,535,700 | 100 | % | |||||
(1) | Includes shares of treasury stock owned by our treasury stock fund. |
Item 7.B. | Related Party Transactions |
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Item 7.C. | Interests of Experts and Counsel |
Item 8. | Financial Information |
Average Total | ||||||||||||
Annual Dividend per | Interim Dividend | Dividend per | ||||||||||
Year | Common Stock | per Common Stock | Common Stock | |||||||||
(In Won) | (In Won) | (In Won) | ||||||||||
2004 | 2,000 | 1,000 | 3,000 | |||||||||
2005 | 2,000 | 1,000 | 3,000 | |||||||||
2006 | 2,000 | — | 2,000 | |||||||||
2007 | 2,000 | — | 2,000 | |||||||||
2008 | 1,120 | — | 1,120 |
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Item 8.B. | Significant Changes |
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Item 9. | The Offer and Listing |
Item 9.A. | Offer and Listing Details |
Price | Average Daily | |||||||||||
High | Low | Trading Volume | ||||||||||
(In Won) | (Number of shares) | |||||||||||
2004 | 47,550 | 34,200 | 577,620 | |||||||||
2005 | 45,150 | 37,600 | 539,707 | |||||||||
2006 | 49,350 | 37,600 | 539,707 | |||||||||
2007 | 56,100 | 40,150 | 917,274 | |||||||||
First quarter | 48,000 | 42,050 | 649,901 | |||||||||
Second quarter | 46,450 | 40,150 | 928,878 | |||||||||
Third quarter | 46,950 | 41,000 | 899,070 | |||||||||
Fourth quarter | 56,100 | 41,800 | 1,190,247 | |||||||||
2008 | 52,200 | 29,500 | 1,019,430 | |||||||||
First quarter | 52,200 | 44,750 | 942,445 | |||||||||
Second quarter | 50,400 | 43,800 | 818,889 | |||||||||
Third quarter | 47,100 | 40,200 | 1,082,102 | |||||||||
Fourth quarter | 41,550 | 29,500 | 1,221,297 | |||||||||
2009 (through June 26) | 42,000 | 35,800 | 1,503,567 | |||||||||
First quarter | 42,000 | 35,800 | 1,275,616 | |||||||||
January | 42,000 | 38,750 | 1,304,669 | |||||||||
February | 40,600 | 35,800 | 1,071,391 | |||||||||
March | 40,100 | 36,900 | 1,436,184 | |||||||||
Second quarter (through June 26) | 39,000 | 33,100 | 1,737,339 | |||||||||
April | 39,000 | 36,100 | 1,840,227 | |||||||||
May | 38,300 | 33,100 | 1,768,747 | |||||||||
June (through June 26) | 38,150 | 34,600 | 1,580,410 |
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Price | Average Daily | |||||||||||
High | Low | Trading Volume | ||||||||||
(In US$) | (Number of ADSs) | |||||||||||
2004 | 22.73 | 16.57 | 671,995 | |||||||||
2005 | 23.21 | 19.75 | 457,082 | |||||||||
2006 | 26.66 | 20.11 | 562,859 | |||||||||
2007 | 29.22 | 21.51 | 592,205 | |||||||||
First quarter | 25.82 | 22.01 | 557,559 | |||||||||
Second quarter | 24.72 | 21.82 | 638,232 | |||||||||
Third quarter | 25.11 | 21.51 | 493,274 | |||||||||
Fourth quarter | 29.22 | 22.80 | 679,756 | |||||||||
2008 | 27.10 | 10.10 | 819,767 | |||||||||
First quarter | 27.10 | 23.35 | 824,931 | |||||||||
Second quarter | 25.35 | 21.20 | 561,939 | |||||||||
Third quarter | 23.03 | 16.79 | 765,989 | |||||||||
Fourth quarter | 17.18 | 10.10 | 1,126,453 | |||||||||
2009 (through June 26) | 15.74 | 11.42 | 845,524 | |||||||||
First quarter | 15.74 | 11.42 | 973,568 | |||||||||
January | 15.74 | 13.97 | 839,058 | |||||||||
February | 14.59 | 11.55 | 903,166 | |||||||||
March | 14.66 | 11.42 | 1,156,651 | |||||||||
Second quarter (through June 26) | 15.09 | 13.14 | 717,480 | |||||||||
April | 14.72 | 13.31 | 832,162 | |||||||||
May | 15.09 | 13.14 | 785,343 | |||||||||
June (through June 26) | 14.83 | 13.72 | 529,202 |
Item 9.B. | Plan of Distribution |
Item 9.C. | Markets |
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Period Average | ||||||||||||||||||||||||
Dividend | Price | |||||||||||||||||||||||
Yield(1)(2) | Earnings | |||||||||||||||||||||||
Year | Opening | High | Low | Closing | (Percent) | Ratio(2)(3) | ||||||||||||||||||
1983 | 122.52 | 134.46 | 115.59 | 121.21 | 6.9 | 3.8 | ||||||||||||||||||
1984 | 115.25 | 142.46 | 115.25 | 142.46 | 5.1 | 4.5 | ||||||||||||||||||
1985 | 139.53 | 163.37 | 131.40 | 163.37 | 5.3 | 5.2 | ||||||||||||||||||
1986 | 161.40 | 279.67 | 153.85 | 272.61 | 4.3 | 7.6 | ||||||||||||||||||
1987 | 264.82 | 525.11 | 264.82 | 525.11 | 2.6 | 10.9 | ||||||||||||||||||
1988 | 532.04 | 922.56 | 527.89 | 907.20 | 2.4 | 11.2 | ||||||||||||||||||
1989 | 919.61 | 1,007.77 | 844.75 | 909.72 | 2.0 | 13.9 | ||||||||||||||||||
1990 | 908.59 | 928.82 | 566.27 | 696.11 | 2.2 | 12.8 | ||||||||||||||||||
1991 | 679.75 | 763.10 | 586.51 | 610.92 | 2.6 | 11.2 | ||||||||||||||||||
1992 | 624.23 | 691.48 | 459.07 | 678.44 | 2.2 | 10.9 | ||||||||||||||||||
1993 | 697.41 | 874.10 | 605.93 | 866.18 | 1.6 | 12.7 | ||||||||||||||||||
1994 | 879.32 | 1,138.75 | 855.37 | 1,027.37 | 1.2 | 16.2 | ||||||||||||||||||
1995 | 1,027.45 | 1,016.77 | 847.09 | 882.94 | 1.2 | 16.4 | ||||||||||||||||||
1996 | 882.29 | 986.84 | 651.22 | 651.22 | 1.3 | 17.8 | ||||||||||||||||||
1997 | 647.67 | 792.29 | 350.68 | 376.31 | 1.5 | 17.0 | ||||||||||||||||||
1998 | 374.41 | 579.86 | 280.00 | 562.46 | 1.9 | 10.8 | ||||||||||||||||||
1999 | 565.10 | 1,028.07 | 498.42 | 1,028.07 | 1.1 | 13.5 | ||||||||||||||||||
2000 | 1,028.33 | 1,059.04 | 500.60 | 504.62 | 1.6 | 18.6 | ||||||||||||||||||
2001 | 503.31 | 704.50 | 468.76 | 693.70 | 2.0 | 14.2 | ||||||||||||||||||
2002 | 698.00 | 937.61 | 584.04 | 627.55 | 1.4 | 17.8 | ||||||||||||||||||
2003 | 633.03 | 822.16 | 515.24 | 810.71 | 2.2 | 10.9 | ||||||||||||||||||
2004 | 821.26 | 936.06 | 719.59 | 895.92 | 2.1 | 15.8 | ||||||||||||||||||
2005 | 896.00 | 1,379.37 | 870.84 | 1,379.37 | 1.7 | 11.0 | ||||||||||||||||||
2006 | 1,383.32 | 1,464.70 | 1,203.86 | 1,434.46 | 1.7 | 11.4 | ||||||||||||||||||
2007 | 1,435.26 | 2,064.85 | 1,355.79 | 1,897.13 | 1.6 | 14.8 | ||||||||||||||||||
2008 | 1,853.45 | 1,888.88 | 938.75 | 1,124.47 | 2.6 | 8.9 | ||||||||||||||||||
2009 (through June 26) | 1,401.57 | 1,404.01 | 1,388.38 | 1,394.53 | 1.44 | 18.45 |
(1) | Dividend yields are based on daily figures. Dividend yields after January 3, 1984 include cash dividends only. |
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(2) | Starting in April 2000, dividend yield and price earnings ratio are calculated based on KOSPI 200, an index of 200 equity securities listed on the KRX KOSPI Market. Starting in April 2000, KOSPI 200 excludes classified companies, companies which did not submit annual reports to the KRX KOSPI Market, and companies which received qualified opinion from external auditors. | |
(3) | The price earnings ratio is based on figures for companies that record a profit in the preceding year. |
Previous Days’ Closing Price | Rounded Down To | |||
Less than | 5 | |||
10 | ||||
50 | ||||
100 | ||||
500 | ||||
1,000 |
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Market Capitalization | ||||||||||||||||||||||||
on the Last Day of Each Period | Average Daily Trading Volume, | |||||||||||||||||||||||
Number of | Value | |||||||||||||||||||||||
Listed | (Billions of | (Millions of | Thousands | (Millions of | (Thousands of | |||||||||||||||||||
Year | Companies | Won) | Dollars)(1) | of Shares | Won) | Dollars)(1) | ||||||||||||||||||
1983 | 328 | 3,490 | 4,387 | 9,325 | 5,941 | 7,468 | ||||||||||||||||||
1984 | 336 | 5,149 | 6,223 | 14,847 | 10,642 | 12,862 | ||||||||||||||||||
1985 | 342 | 6,570 | 7,381 | 18,925 | 12,315 | 13,834 | ||||||||||||||||||
1986 | 355 | 11,994 | 13,924 | 31,755 | 32,870 | 38,159 | ||||||||||||||||||
1987 | 389 | 26,172 | 33,033 | 20,353 | 70,185 | 88,583 | ||||||||||||||||||
1988 | 502 | 64,544 | 94,348 | 10,367 | 198,364 | 289,963 | ||||||||||||||||||
1989 | 626 | 95,477 | 140,490 | 11,757 | 280,967 | 414,430 | ||||||||||||||||||
1990 | 669 | 79,020 | 110,301 | 10,866 | 183,692 | 256,411 | ||||||||||||||||||
1991 | 686 | 73,118 | 96,107 | 14,022 | 214,263 | 281,629 | ||||||||||||||||||
1992 | 688 | 84,712 | 107,448 | 24,028 | 308,246 | 390,977 | ||||||||||||||||||
1993 | 693 | 112,665 | 139,420 | 35,130 | 574,048 | 710,367 | ||||||||||||||||||
1994 | 699 | 151,217 | 191,730 | 36,862 | 776,257 | 984,223 | ||||||||||||||||||
1995 | 721 | 141,151 | 182,201 | 26,130 | 487,762 | 629,613 | ||||||||||||||||||
1996 | 760 | 117,370 | 139,031 | 26,571 | 486,834 | 575,680 | ||||||||||||||||||
1997 | 776 | 70,989 | 50,162 | 41,525 | 555,759 | 392,707 | ||||||||||||||||||
1998 | 748 | 137,799 | 114,091 | 97,716 | 660,429 | 546,803 | ||||||||||||||||||
1999 | 725 | 349,504 | 305,137 | 278,551 | 3,481,620 | 3,039,655 | ||||||||||||||||||
2000 | 704 | 188,042 | 149,275 | 306,163 | 2,602,211 | 2,065,739 | ||||||||||||||||||
2001 | 689 | 255,850 | 192,934 | 473,241 | 1,997,420 | 1,506,237 | ||||||||||||||||||
2002 | 683 | 258,681 | 215,496 | 857,245 | 3,041,598 | 2,533,815 | ||||||||||||||||||
2003 | 684 | 355,363 | 296,679 | 542,010 | 2,216,636 | 1,850,589 | ||||||||||||||||||
2004 | 683 | 412,588 | 395,275 | 372,895 | 2,232,109 | 2,138,445 | ||||||||||||||||||
2005 | 702 | 655,075 | 646,158 | 467,629 | 3,157,662 | 3,114,679 | ||||||||||||||||||
2006 | 731 | 704,588 | 757,948 | 279,096 | 3,435,180 | 3,695,331 | ||||||||||||||||||
2007 | 745 | 951,900 | 1,017,205 | 363,732 | 5,539,588 | 5,917,731 | ||||||||||||||||||
2008 | 763 | 576,888 | 457,122 | 355,205 | 5,189,644 | 4,112,238 | ||||||||||||||||||
2009 (through June 26) | 758 | 721,831 | 562,349 | 423,778 | 4,809,359 | 3,746,774 |
(1) | Converted at the Concentration Base Rate of The Bank of Korea or the Market Average Exchange Rate as announced by Seoul Money Brokerage Services Limited, as the case may be, at the end of the periods indicated. |
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Item 9.D. | Selling Shareholders |
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Item 9.E. | Dilution |
Item 9.F. | Expenses of the Issuer |
Item 10. | Additional Information |
Item 10.A. | Share Capital |
Item 10.B. | Memorandum and Articles of Association |
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• | publicly offered pursuant to the Financial Investment Services and Capital Markets Act; | |
• | issued to members of our employee stock ownership association; | |
• | represented by depositary receipts; | |
• | issued upon exercise of stock options granted to our officers and employees; | |
• | issued through an offering to public investors, the amount of which is no more than 10% of the issued Shares; | |
• | issued in order to satisfy specific needs such as strategic alliance, inducement of foreign funds or new technology, improvement of financial structure or other capital raising requirement; or | |
• | issued to domestic or foreign financial institutions when necessary for raising funds in emergency cases. |
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• | as necessary; | |
• | at the request of shareholders of an aggregate of 3.0% or more of our issued Common Shares; | |
• | at the request of shareholders holding an aggregate of 1.5% or more of our issued Shares for at least six months; or | |
• | at the request of our audit committee. |
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• | amending our articles of incorporation; | |
• | removing a director; | |
• | reduction of our capital stock; | |
• | effecting any dissolution, merger or consolidation of us; | |
• | transferring the whole or any significant part of our business; | |
• | effecting our acquisition of all of the business of any other company or our acquisition of a part of the business of any other company which will significantly affect our business; or | |
• | issuing any new Shares at a price lower than their par value. |
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Item 10.C. | Material Contracts |
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Item 10.D. | Exchange Controls |
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• | odd-lot trading of shares; | |
• | acquisition of shares (“Converted Shares”) by exercise of warrant, conversion right under convertible bonds or withdrawal right under depositary receipts issued outside of Korea by a Korean company; | |
• | acquisition of shares as a result of inheritance, donation, bequest or exercise of shareholders’ rights, including preemptive rights or rights to participate in free distributions and receive dividends; | |
• | over-the-counter transactions between foreigners of a class of shares for which the ceiling on aggregate acquisition by foreigners, as explained below, has been reached or exceeded certain exceptions; | |
• | shares acquired by direct investment as defined in the Foreign Investment Promotion Law; | |
• | disposal of shares pursuant to the exercise of appraisal rights of dissenting shareholders; | |
• | disposal of shares in connection with a tender offer; | |
• | acquisition of shares by a foreign depositary in connection with the issuance of depositary receipts; | |
• | acquisition and disposal of shares through overseas stock exchange market if such shares are simultaneously listed on the KRX KOSPI Market or the KRX KOSDAQ Market and such overseas stock exchange; and | |
• | arm’s length transactions between foreigners, if all of such foreigners belong to an investment group managed by the same person. |
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Item 10.E. | Taxation |
• | a resident of Korea; | |
• | a corporation organized under Korean law; or | |
• | engaged in a trade or business in Korea through a permanent establishment or a fixed base. |
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• | a dealer in securities or currencies; | |
• | a trader in securities that elects to use a mark-to-market method of accounting for your securities holdings; | |
• | a bank; | |
• | a life insurance company; | |
• | a tax-exempt organization; | |
• | a person that holds shares of common stock or ADSs that are a hedge or that are hedged against interest rate or currency risks; | |
• | a person that holds shares of common stock or ADSs as part of a straddle or conversion transaction for tax purposes; | |
• | a person whose functional currency for tax purposes is not the U.S. dollar; or | |
• | a person that owns or is deemed to own 10% or more of any class of our stock. |
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• | a citizen or resident of the United States; | |
• | a U.S. domestic corporation; or | |
• | subject to U.S. federal income tax on a net income basis with respect to income from the shares of common stock or ADSs. |
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Item 10.F. | Dividends and Paying Agents |
Item 10.G. | Statements by Experts |
Item 10.H. | Documents on Display |
Item 10.I. | Subsidiary Information |
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Item 11. | Quantitative and Qualitative Disclosures About Market Risk |
Transaction Type | Financial Institution | Description | ||
Currency swap contracts | Merrill Lynch and others | Exchange foreign currency cash flow for local currency cash flow for a specified period | ||
Combined interest rate currency swap contracts | Merrill Lynch and others | Exchange foreign currency-denominated fixed or variable interest rate payments for local currency-denominated variable or fixed interest rate payments | ||
Currency forward contracts | Kookmin Bank and others | Exchange a specified currency at an agreed exchange rate at a specified date |
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Maturities | ||||||||||||||||||||||||||||||||
December 31, 2008 | ||||||||||||||||||||||||||||||||
2009 | 2010 | 2011 | 2012 | 2013 | Thereafter | Total | Fair Value | |||||||||||||||||||||||||
(In Won millions except rates) | ||||||||||||||||||||||||||||||||
Local currency: | ||||||||||||||||||||||||||||||||
Fixed rate | 1,636,291 | 1,524,326 | 1,405,771 | 580,608 | 730,608 | 608,428 | 6,486,032 | 6,389,560 | ||||||||||||||||||||||||
Average weighted rate(1) | 6.18 | % | 5.67 | % | 5.98 | % | 4.62 | % | 5.96 | % | 5.18 | % | 5.74 | % | — | |||||||||||||||||
Variable rate | 27,927 | 29,384 | 18,018 | 4,630 | 911 | — | 80,870 | 80,256 | ||||||||||||||||||||||||
Average weighted rate(1) | 6.64 | % | 6.75 | % | 6.24 | % | 5.91 | % | 5.91 | % | 0.00 | % | 6.54 | % | — | |||||||||||||||||
Sub-total | 1,664,218 | 1,553,710 | 1,423,789 | 585,238 | 731,519 | 608,428 | 6,566,902 | 6,469,816 | ||||||||||||||||||||||||
Foreign currency: | ||||||||||||||||||||||||||||||||
Fixed rate | — | 50,424 | 38,535 | 251,500 | — | 1,634,750 | 1,975,209 | 1,955,797 | ||||||||||||||||||||||||
Average weighted rate(1) | 0.00 | % | 4.88 | % | 6.00 | % | 5.13 | % | 0.00 | % | 5.62 | % | 5.53 | % | — | |||||||||||||||||
Variable rate | 50,803 | 28,170 | 682,257 | 146,373 | 255,524 | — | 1,163,127 | 1,080,953 | ||||||||||||||||||||||||
Average weighted rate(1) | 5.81 | % | 4.94 | % | 2.92 | % | 4.45 | % | 4.36 | % | 0.00 | % | 3.53 | % | — | |||||||||||||||||
Subtotal | 50,803 | 78,594 | 720,792 | 397,873 | 255,524 | 1,634,750 | 3,138,336 | 3,036,750 | ||||||||||||||||||||||||
Total | 1,715,021 | 1,632,304 | 2,144,581 | 983,111 | 987,043 | 2,243,178 | 9,705,238 | 9,506,567 | ||||||||||||||||||||||||
(1) | Weighted average rates of the portfolio at the period end. |
Item 12. | Description of Securities Other than Equity Securities |
Item 12.A. | Debt Securities |
Item 12.B. | Warrants and Rights |
Item 12.C. | Other Securities |
Item 12.D. | American Depositary Shares |
Item 13. | Defaults, Dividend Arrearages and Delinquencies |
Item 14. | Material Modifications to the Rights of Security Holders and Use of Proceeds |
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Item 15. | Controls and Procedures |
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Item 16. | [Reserved] |
Item 16A. | Audit Committee Financial Expert |
Item 16B. | Code of Ethics |
Item 16C. | Principal Accountant Fees and Services |
Year Ended | ||||||||
December 31, | ||||||||
2007 | 2008 | |||||||
(In millions) | ||||||||
Audit fees | 3,078 | 3,741 | ||||||
Audit-related fees | — | — | ||||||
Tax fees | 12 | 25 | ||||||
Other fees | — | — | ||||||
Total fees | 3,090 | 3,766 | ||||||
Item 16D. | Exemptions from the Listing Standards for Audit Committees |
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Item 16E. | Purchases of Equity Securities by the Issuer and Affiliated Purchasers |
Total Number | Maximum | |||||||||||||||
of Shares | Number of | |||||||||||||||
Purchased as | Shares that | |||||||||||||||
Part of | May Yet be | |||||||||||||||
Total Number | Average Price | Publicly | Purchased | |||||||||||||
of Shares | Paid per Share | Announced | Under the | |||||||||||||
Period | Purchased | (In Won) | Plans(2) | Plans(2) | ||||||||||||
January 1 to January 31 | 0 | 0 | 0 | 0 | ||||||||||||
February 1 to February 29 | 0 | 0 | 0 | 0 | ||||||||||||
March 1 to March 31 | 0 | 0 | 0 | 0 | ||||||||||||
April 1 to April 30 | 0 | 0 | 0 | 0 | ||||||||||||
May 1 to May 31 | 0 | 0 | 0 | 1,666,700 | ||||||||||||
June 1 to June 30 | 280,000 | (1) | 44,848 | 280,000 | 1,386,700 | |||||||||||
July 1 to July 31 | 1,386,700 | (1) | 44,132 | 1,386,700 | 0 | |||||||||||
August 1 to August 31 | 0 | 0 | 0 | 0 | ||||||||||||
September 1 to September 30 | 0 | 0 | 0 | 0 | ||||||||||||
October 1 to October 31 | 0 | 0 | 0 | 0 | ||||||||||||
November 1 to November 30 | 0 | 0 | 0 | 0 | ||||||||||||
December 1 to December 31 | 0 | 0 | 0 | 0 | ||||||||||||
Total | 1,666,700 | 44,252 | 1,666,700 | 0 | ||||||||||||
(1) | Purchased through open-market transactions. | |
(2) | On June 18, 2008, we announced a plan to repurchase up to 1,666,700 common shares during the period from June 23, 2008 to September 19, 2008. On July 18, 2008, we completed the repurchase of such shares under this plan. |
Item 16G. | Corporate Governance |
NYSE Corporate Governance Standards | KT Corporation’s Corporate Governance Practice | |
Director Independence | ||
Independent directors must comprise a majority of the board. | The Commercial Code of Korea requires that our board of directors must comprise no less than a majority of outside directors. Our outside directors must meet the criteria for outside directorship set forth under the Commercial Code of Korea. The majority of our board of directors is independent (as defined in accordance with the New York Stock Exchange’s standards), and 7 out of 10 directors are outside directors. |
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NYSE Corporate Governance Standards | KT Corporation’s Corporate Governance Practice | |
Nomination/Corporate Governance Committee | ||
Listed companies must have a nomination/corporate governance committee composed entirely of independent directors. | We have not established a separate nomination/corporate governance committee. However, we maintain an Outside Director Candidate Nominating Committee composed of all of our outside directors and one standing director. We also maintain a Corporate Governance Committee comprised of five outside directors and one standing director. The committee was formed on a temporary basis in May 2009 to prepare for our merger with KTF and recommend to the board revisions to the corporate governance practices applicable to the merged company. The committee is expected to dissolve in December 2009. | |
Compensation Committee | ||
Listed companies must have a compensation committee composed entirely of independent directors. | We maintain an Evaluation and Compensation Committee composed of four outside directors. | |
Executive Session | ||
Listed companies must hold meetings solely attended by non-management directors to more effectively check and balance management directors. | Our outside directors hold meetings solely attended by outside directors in accordance with the charter of our board of directors. | |
Audit Committee | ||
Listed companies must have an audit committee that is composed of more than three directors and satisfy the requirements ofRule 10A-3 under the Exchange Act. | We maintain an Audit Committee comprised of four outside directors who meet the applicable independence criteria set forth underRule 10A-3 under the Exchange Act. | |
Shareholder Approval of Equity Compensation Plan | ||
Listed companies must allow their shareholders to exercise their voting rights with respect to any material revision to the company’s equity compensation plan. | We currently have two equity compensation plans: one providing for the grant of stock options to officers and standing directors; and an employee stock ownership association program. | |
All material matters related to the granting stock options are provided in our articles of incorporation, and any amendments to the articles of incorporation are subject to shareholders’ approval. Matters related to the employee stock ownership association program are not subject to shareholders’ approval under Korean law. | ||
Corporate Governance Guidelines | ||
Listed companies must adopt and disclose corporate governance guidelines. | We have adopted Corporate Governance Guidelines in March 2009 setting forth our practices with respect to corporate governance matters. Our Corporate Governance Guidelines are in compliance with Korean law but do not meet all requirements established by the New York Stock Exchange for U.S. companies listed on the exchange. A copy of our Corporate Governance Guidelines in Korean is available on our website at www.kt.com | |
Code of Business Conduct and Ethics | ||
Listed companies must adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for executive officers. | We have adopted a Code of Ethics for all directors, officers and employees. A copy of our Code of Ethics in Korean is available on our website at www.kt.com |
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Item 17. | Financial Statements |
Item 18. | Financial Statements |
Page | ||||
F-1 | ||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-6 | ||||
F-8 | ||||
F-16 |
Item 19. | Exhibits |
1 | Articles of Incorporation of KT Corporation (English translation) Form of Common Stock Certificate of KT Corporation, par value | |||
2 | .1* | Deposit Agreement dated as of May 25, 1999 entered into among KT Corporation, Citibank, N.A., as depositary, and all Holders and Beneficial Owners of American Depositary Shares evidenced by the American Depositary Receipts issued thereunder, including the form of American depositary receipt (incorporated herein by reference to Exhibit(a)(i) of the Registrant’s Registration Statement (RegistrationNo. 333-13578) onForm F-6) | ||
2 | .2* | Form of Amendment No. 1 Deposit Agreement dated as of May 25, 1999 entered into among KT Corporation, Citibank, N.A., as depositary, and all Holders and Beneficial Owners of American Depositary Shares evidenced by the American Depositary Receipts issued thereunder, including the form of American depositary receipt (incorporated herein by reference to Exhibit(a)(ii) of the Registrant’s Registration Statement (RegistrationNo. 333-13578) onForm F-6) | ||
2 | .3* | Letter from Citibank, N.A., as depositary, to the Registrant relating to the pre-release of the American depositary receipts (incorporated herein by reference to the Registrant’s Registration Statement (RegistrationNo. 333-10330) onForm F-6) | ||
2 | .4* | Letter from Citibank, N.A., as depositary, to the Registrant relating to the establishment of a direct registration system for ADSs and the issuance of uncertified ADSs as part of the direct registration system. (incorporated herein by reference to Exhibit 2.4 of the Registrant’s Annual Report onForm 20-F filed on June 30, 2008) | ||
4 | .1* | The Merger Agreement dated January 20, 2009, entered into by and between KT Corporation and KT Freetel Co., Ltd. (incorporated herein by reference to Annex I of the Registrant’s Registration Statement (RegistrationNo. 333-156817) onForm F-4) | ||
8 | .1 | List of subsidiaries of KT Corporation | ||
12 | .1 | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||
12 | .2 | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||
13 | .1 | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||
15 | .1 | The Telecommunications Basic Law (English translation) | ||
15 | .2 | Enforcement Decree of the Telecommunications Basic Law (English translation) | ||
15 | .3 | The Telecommunications Business Act (English translation) | ||
15 | .4 | Enforcement Decree of the Telecommunications Business Act (English translation) |
* | Filed previously. |
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KT Corporation
Sungnam, Korea
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KT Corporation
Sungnam, Korea
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(Note 2) | ||||||||||||
2007 | 2008 | 2008 | ||||||||||
In thousands of | ||||||||||||
U.S. dollars | ||||||||||||
In millions of Korean won | ||||||||||||
ASSETS | ||||||||||||
CURRENT ASSETS: | ||||||||||||
Cash and cash equivalents (Notes 2, 16 and 31) | 1,384,985 | 1,890,918 | $ | 1,498,350 | ||||||||
Short-term investment assets (Notes 3, 6 and 16) | 460,170 | 417,138 | 330,537 | |||||||||
Accounts receivable — trade, less allowance for doubtful accounts of | 2,621,035 | 3,014,687 | 2,388,817 | |||||||||
Loans, less allowance for doubtful accounts of | 215,945 | 292,884 | 232,079 | |||||||||
Current finance lease receivables, less allowance for doubtful accounts of | 78,103 | 180,954 | 143,387 | |||||||||
Accounts receivable — other, less allowance for doubtful accounts of | 176,317 | 202,872 | 160,754 | |||||||||
Accrued revenues | 13,684 | 21,413 | 16,968 | |||||||||
Advance payments | 67,272 | 73,962 | 58,607 | |||||||||
Prepaid expenses | 54,918 | 99,214 | 78,616 | |||||||||
Prepaid income taxes | 1,411 | 1,518 | 1,203 | |||||||||
Guarantee deposits (Note 16) | 9,414 | 1,382 | 1,095 | |||||||||
Current derivative instruments assets (Notes 2 and 33) | 696 | 201,709 | 159,833 | |||||||||
Current deferred income tax assets (Notes 2 and 26) | 259,525 | 249,941 | 198,052 | |||||||||
Inventories (Notes 2, 4 and 29) | 299,104 | 424,841 | 336,641 | |||||||||
Other current assets | 220 | 393 | 311 | |||||||||
Total Current Assets | 5,642,799 | 7,073,826 | 5,605,250 | |||||||||
NON-CURRENT ASSETS: | ||||||||||||
Available-for-sale securities (Notes 2 and 6) | 83,352 | 74,744 | 59,227 | |||||||||
Equity method investment securities (Notes 2 and 7) | 234,582 | 353,347 | 279,990 | |||||||||
Held-to-maturity securities (Notes 2 and 6) | 244 | 8,077 | 6,400 | |||||||||
Long-term loans to employees | 107,675 | 85,969 | 68,121 | |||||||||
Long-term financial instruments (Note 3) | 2,864 | 44 | 35 | |||||||||
Other investment assets | 41,478 | 23,819 | 18,874 | |||||||||
Property and equipment, at cost (Note 2, 8, 9, 14 and 29) | 49,503,020 | 49,393,746 | 39,139,260 | |||||||||
Less accumulated depreciation | (33,998,827 | ) | (33,965,691 | ) | (26,914,177 | ) | ||||||
Less accumulated impairment loss | (10,990 | ) | (6,957 | ) | (5,513 | ) | ||||||
Less contribution for construction | (205,201 | ) | (232,467 | ) | (184,205 | ) | ||||||
Net property and equipment | 15,288,002 | 15,188,631 | 12,035,365 | |||||||||
Intangible assets, net (Notes 2 and 10) | 1,735,323 | 1,474,238 | 1,168,176 | |||||||||
Leasehold rights and deposits (Notes 2 and 16) | 347,217 | 352,655 | 279,441 | |||||||||
Long-term accounts receivable — trade, less allowance for doubtful accounts of | 144,804 | 282,162 | 223,583 | |||||||||
Long-term loans, less allowance for doubtful accounts of | 145,967 | 253,445 | 200,828 | |||||||||
Non-current finance lease receivables, less allowance for doubtful accounts of | 137,827 | 290,799 | 230,427 | |||||||||
Non-current deferred income tax assets (Notes 2 and 26) | 91,429 | 235,514 | 186,620 | |||||||||
Long-term accounts receivable — other (Notes 2 and 11) | 36,171 | 17,260 | 13,677 | |||||||||
Non-current derivative instruments assets (Notes 2 and 33) | 3,681 | 302,689 | 239,849 | |||||||||
Other non-current assets | 83,470 | 121,385 | 96,184 | |||||||||
Total Non-current Assets | 18,484,086 | 19,064,778 | 15,106,797 | |||||||||
TOTAL ASSETS | 24,126,885 | 26,138,604 | $ | 20,712,047 | ||||||||
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(Note 2) | ||||||||||||
2007 | 2008 | 2008 | ||||||||||
In thousands of | ||||||||||||
U.S. dollars | ||||||||||||
In millions of Korean won | ||||||||||||
LIABILITIES AND EQUITY | ||||||||||||
CURRENT LIABILITIES: | ||||||||||||
Accounts payable — trade (Notes 11, 16 and 17) | 1,020,487 | 833,818 | $ | 660,712 | ||||||||
Short-term borrowings (Note 16) | 225,970 | 274,306 | 217,358 | |||||||||
Accounts payable — other (Notes 11, 14, 16 and 17) | 1,441,686 | 1,475,873 | 1,169,471 | |||||||||
Advance receipts | 87,442 | 119,356 | 94,577 | |||||||||
Withholdings (Note 16) | 200,744 | 228,517 | 181,075 | |||||||||
Accrued expenses (Notes 16 and 17) | 483,596 | 528,004 | 418,387 | |||||||||
Income taxes payable (Note 2) | 303,096 | 151,794 | 120,281 | |||||||||
Current portion of bonds and long-term borrowings (Notes 2, 11, 12 and 16) | 1,019,802 | 1,439,960 | 1,141,014 | |||||||||
Unearned revenue | 7,807 | 9,170 | 7,266 | |||||||||
Key money deposits (Notes 16 and 17) | 101,360 | 127,689 | 101,180 | |||||||||
Current derivative instruments liabilities (Notes 2 and 33) | 132,325 | 13,619 | 10,792 | |||||||||
Current accrued provisions (Notes 2 and 13) | 47,417 | 38,815 | 30,757 | |||||||||
Other current liabilities | 6,889 | 107 | 84 | |||||||||
Total Current Liabilities | 5,078,621 | 5,241,028 | 4,152,954 | |||||||||
NON-CURRENT LIABILITIES: | ||||||||||||
Bonds (Notes 2, 12 and 16) | 5,842,827 | 7,662,663 | 6,071,841 | |||||||||
Long-term borrowings in Korean won (Notes 2, 11 and 12) | 110,935 | 146,813 | 116,334 | |||||||||
Long-term borrowings in foreign currency (Notes 2, 12 and 16) | 19,709 | 137,249 | 108,755 | |||||||||
Provisions for severance indemnities (Note 2) | 514,991 | 507,819 | 402,392 | |||||||||
Refundable deposits for telephone installation (Note 15) | 840,962 | 781,525 | 619,275 | |||||||||
Long-term accounts payable — trade (Note 11) | — | 16,856 | 13,357 | |||||||||
Long-term accounts payable — other (Notes 2, 11 and 14) | 469,255 | 317,101 | 251,269 | |||||||||
Long-term deposits received | 42,257 | 93,800 | 74,326 | |||||||||
Non-current accrued provisions (Notes 2 and 13) | 25,420 | 85,146 | 67,469 | |||||||||
Non-current deferred income tax liabilities (Notes 2 and 26) | 1,896 | 2,734 | 2,166 | |||||||||
Non-current derivative instruments liabilities (Notes 2 and 33) | — | 6,777 | 5,370 | |||||||||
Other non-current liabilities | 42,246 | 51,195 | 40,566 | |||||||||
Total Non-current Liabilities | 7,910,498 | 9,809,678 | 7,773,120 | |||||||||
Total Liabilities | 12,989,119 | 15,050,706 | 11,926,074 | |||||||||
EQUITY: | ||||||||||||
Common Stock (Notes 1 and 18) | 1,560,998 | 1,560,998 | 1,236,924 | |||||||||
Capital Surplus | 1,440,777 | 1,440,633 | 1,141,548 | |||||||||
Capital Adjustments: | ||||||||||||
Treasury stock (Note 22) | (3,825,688 | ) | (3,824,881 | ) | (3,030,809 | ) | ||||||
Stock options (Notes 2 and 21) | 8,880 | 8,880 | 7,037 | |||||||||
Other share — based payments (Notes 2 and 21) | 1,022 | 1,420 | 1,125 | |||||||||
Other capital adjustments | (168,143 | ) | (180,155 | ) | (142,754 | ) | ||||||
Total Capital Adjustments | (3,983,929 | ) | (3,994,736 | ) | (3,165,401 | ) | ||||||
Accumulated Other Comprehensive Income (Note 20): | ||||||||||||
Gain on translation of foreign operations (Note 2) | 2,471 | 11,083 | 8,782 | |||||||||
Loss on translation of foreign operations (Note 2) | (13,195 | ) | (4,887 | ) | (3,872 | ) | ||||||
Unrealized gain on valuation of available-for-sale securities (Notes 2 and 6) | 10,644 | 4,813 | 3,814 | |||||||||
Unrealized loss on valuation of available-for-sale securities (Notes 2 and 6) | — | (4,345 | ) | (3,443 | ) | |||||||
Gain on valuation of derivatives for cash flow hedge (Notes 2 and 33) | 2,024 | 11,136 | 8,824 | |||||||||
Loss on valuation of derivatives for cash flow hedge (Notes 2 and 33) | — | (13,710 | ) | (10,864 | ) | |||||||
Increase in equity of associates (Notes 2 and 7) | 2,766 | 10,369 | 8,216 | |||||||||
Decrease in equity of associates (Notes 2 and 7) | (4,568 | ) | (3,580 | ) | (2,837 | ) | ||||||
Total Accumulated Other Comprehensive Income | 142 | 10,879 | 8,620 | |||||||||
Retained Earnings | 9,843,775 | 9,814,115 | 7,776,636 | |||||||||
Equity attributable to equity holders of the parent | 8,861,763 | 8,831,889 | 6,998,327 | |||||||||
Minority Interest | 2,276,003 | 2,256,009 | 1,787,646 | |||||||||
Total Equity | 11,137,766 | 11,087,898 | 8,785,973 | |||||||||
TOTAL LIABILITIES AND EQUITY | 24,126,885 | 26,138,604 | $ | 20,712,047 | ||||||||
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(Note 2) | ||||||||||||||||
2006 | 2007 | 2008 | 2008 | |||||||||||||
In millions of Korean won | In thousands of | |||||||||||||||
U.S. dollars | ||||||||||||||||
OPERATING REVENUES (Notes 2, 17, 23, 24 and 34) | ||||||||||||||||
Service revenue | 15,935,902 | 16,336,254 | 16,777,327 | $ | 13,294,237 | |||||||||||
PCS handset sales | 1,888,978 | 2,323,828 | 2,867,216 | 2,271,962 | ||||||||||||
17,824,880 | 18,660,082 | 19,644,543 | 15,566,199 | |||||||||||||
OPERATING EXPENSES (Notes 2, 17, 25, 34 and 35) | 15,441,504 | 16,914,741 | 18,216,781 | 14,434,850 | ||||||||||||
OPERATING INCOME | 2,383,376 | 1,745,341 | 1,427,762 | 1,131,349 | ||||||||||||
NON-OPERATING REVENUES: | ||||||||||||||||
Interest income | 111,988 | 155,862 | 151,563 | 120,097 | ||||||||||||
Dividend income | 1,561 | 583 | 1,060 | 840 | ||||||||||||
Foreign currency transaction gain | 37,956 | 7,508 | 67,475 | 53,467 | ||||||||||||
Foreign currency translation gain (Note 2) | 126,215 | 8,626 | 40,668 | 32,225 | ||||||||||||
Equity in income of associates (Notes 2 and 7) | 8,685 | 24,285 | 16,061 | 12,727 | ||||||||||||
Gain on breach of contracts | 2,784 | 1,821 | 1,555 | 1,232 | ||||||||||||
Gain on disposal of useless materials | 21,919 | 25,328 | — | — | ||||||||||||
Gain on disposal of short-term investment assets | 880 | 2,094 | 446 | 353 | ||||||||||||
Gain on valuation of short-term investment assets | 158 | 1,085 | 537 | 426 | ||||||||||||
Gain on disposal of available-for-sale securities (Note 6) | 83,581 | 9,664 | 3,996 | 3,166 | ||||||||||||
Reversal of impairment losses of available-for-sale securities (Notes 2) | 227 | 76 | — | — | ||||||||||||
Reversal of impairment losses of held-to-maturity securities (Note 2) | 12,493 | — | — | — | ||||||||||||
Gain on disposal of equity method investment securities | 5,029 | 1,832 | 1 | 1 | ||||||||||||
Gain on disposal of property and equipment | 8,953 | 29,459 | 5,391 | 4,272 | ||||||||||||
Gain on disposal of intangible assets | 131 | 221 | 1,000 | 792 | ||||||||||||
Reversal of accrued provisions (Note 13) | 21,124 | 50,945 | 4,069 | 3,224 | ||||||||||||
Amortization of negative goodwill (Notes 2 and 10) | — | 518 | 65 | 52 | ||||||||||||
Gain on settlement of derivatives (Note 2) | 8,730 | 9,778 | 17,183 | 13,616 | ||||||||||||
Gain on valuation of derivatives (Notes 2 and 33) | 8,654 | 40,140 | 650,680 | 515,594 | ||||||||||||
Other non-operating revenue | 104,097 | 118,157 | 92,157 | 73,025 | ||||||||||||
Total Non-operating Revenues | 565,165 | 487,982 | 1,053,907 | 835,109 | ||||||||||||
NON-OPERATING EXPENSES: | ||||||||||||||||
Interest expense | (499,169 | ) | (466,461 | ) | (481,629 | ) | (381,639 | ) | ||||||||
Other bad debt expense (Note 2) | (19,148 | ) | (4,473 | ) | (22,355 | ) | (17,714 | ) | ||||||||
Foreign currency transaction loss | (12,638 | ) | (13,064 | ) | (63,422 | ) | (50,255 | ) | ||||||||
Foreign currency translation loss (Note 2) | (15,675 | ) | (15,819 | ) | (802,452 | ) | (635,857 | ) | ||||||||
Equity in loss of associates (Notes 2 and 7) | (15,390 | ) | (8,407 | ) | (28,386 | ) | (22,493 | ) | ||||||||
Loss on disposal of equity method investment securities | (143 | ) | (549 | ) | (137 | ) | (109 | ) | ||||||||
Loss on impairment of equity method investment securities (Notes 2 and 7) | — | — | (2,654 | ) | (2,103 | ) | ||||||||||
Contribution payments for research and development | (10,000 | ) | — | — | — | |||||||||||
Donations | (76,257 | ) | (89,563 | ) | (79,544 | ) | (63,030 | ) | ||||||||
Loss on disposal of short-term investment assets | — | — | (1,004 | ) | (796 | ) | ||||||||||
Loss on valuation of short-term investment assets | — | — | (1,841 | ) | (1,459 | ) | ||||||||||
Loss on disposal of available-for-sale securities (Note 6) | (5,161 | ) | (828 | ) | (250 | ) | (198 | ) |
F-6
Table of Contents
(Note 2) | ||||||||||||||||
2006 | 2007 | 2008 | 2008 | |||||||||||||
In millions of Korean won | In thousands of | |||||||||||||||
U.S. dollars | ||||||||||||||||
Loss on Impairment of available-for-sale securities (Notes 2 and 6) | (2,091 | ) | (1,809 | ) | (3,826 | ) | (3,032 | ) | ||||||||
Loss on impairment of investment assets | (899 | ) | (6,855 | ) | (2,677 | ) | (2,121 | ) | ||||||||
Loss on disposal of property and equipment | (108,290 | ) | (94,775 | ) | (94,308 | ) | (74,729 | ) | ||||||||
Loss on impairment of property and equipment (Notes 2 and 8) | (1,555 | ) | (7,990 | ) | (20,676 | ) | (16,384 | ) | ||||||||
Loss on disposal of intangible assets | (1,541 | ) | (535 | ) | (1,653 | ) | (1,310 | ) | ||||||||
Loss on impairment of intangible assets (Notes 2 and 10) | (10,885 | ) | (9,178 | ) | (17,435 | ) | (13,815 | ) | ||||||||
Loss on disposal of accounts receivable — trade | (10,881 | ) | (492 | ) | (582 | ) | (461 | ) | ||||||||
Loss on lease cancellation | (22,695 | ) | — | — | — | |||||||||||
Loss on settlement of derivatives (Note 2) | (25,313 | ) | (11,381 | ) | (9,665 | ) | (7,658 | ) | ||||||||
Loss on valuation of derivatives (Notes 2 and 33) | (86,715 | ) | (15,542 | ) | (10,936 | ) | (8,666 | ) | ||||||||
Other non-operating expense | (38,249 | ) | (37,839 | ) | (155,088 | ) | (122,891 | ) | ||||||||
Total Non-operating Expenses | (962,695 | ) | (785,560 | ) | (1,800,520 | ) | (1,426,720 | ) | ||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE | 1,985,846 | 1,447,763 | 681,149 | 539,738 | ||||||||||||
INCOME TAX EXPENSE ON CONTINUING OPERATIONS (Note 26) | 476,125 | 356,799 | 167,859 | 133,011 | ||||||||||||
NEWLY INCLUDED SUBSIDIARY’S NET LOSS BEFORE ACQUISITION | — | 5,810 | — | — | ||||||||||||
INCOME FROM CONTINUING OPERATIONS | 1,509,721 | 1,096,774 | 513,290 | 406,727 | ||||||||||||
INCOME (LOSS) FROM DISCONTINUING OPERATIONS (Note 27) | (4 | ) | 74,204 | — | — | |||||||||||
NET INCOME | 1,509,717 | 1,170,978 | 513,290 | $ | 406,727 | |||||||||||
Attributable to: | ||||||||||||||||
EQUITY HOLDERS OF THE PARENT | 1,291,863 | 1,056,227 | 449,810 | $ | 356,426 | |||||||||||
MINORITY INTEREST | 217,854 | 114,751 | 63,480 | 50,301 | ||||||||||||
1,509,717 | 1,170,978 | 513,290 | $ | 406,727 | ||||||||||||
NET INCOME PER SHARE (Note 28)(*) | ||||||||||||||||
Basic income per share from continuing operations (in Korean won) | 6,153 | 4,754 | 2,217 | $ | 1,757 | |||||||||||
Basic net income per share (in Korean won) | 6,155 | 5,112 | 2,217 | $ | 1,757 | |||||||||||
Diluted income per share from continuing operations (in Korean won) | 6,146 | 4,754 | 2,217 | $ | 1,757 | |||||||||||
Diluted net income per share (in Korean won) | 6,148 | 5,112 | 2,217 | $ | 1,757 | |||||||||||
(*) | Income per share attributable to the equity holders of the parent |
F-7
Table of Contents
(Note 2) | ||||||||||||||||
2006 | 2007 | 2008 | 2008 | |||||||||||||
In millions of Korean won | In thousands of | |||||||||||||||
U.S. dollars | ||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||||
Net income | 1,509,717 | 1,170,978 | 513,290 | $ | 406,727 | |||||||||||
Expenses not involving cash payments: | ||||||||||||||||
Share-based payment | 531 | 1,239 | 1,922 | 1,523 | ||||||||||||
Accrued severance indemnities | 240,843 | 359,473 | 362,342 | 287,117 | ||||||||||||
Depreciation | 3,228,293 | 3,225,887 | 3,264,291 | 2,586,601 | ||||||||||||
Amortization | 389,710 | 430,623 | 438,544 | 347,499 | ||||||||||||
Provision for doubtful accounts | 111,285 | 69,790 | 150,583 | 119,321 | ||||||||||||
Interest expense | 27,292 | 27,942 | 45,581 | 36,118 | ||||||||||||
Other bad debt expense | 19,148 | 3,539 | 22,355 | 17,714 | ||||||||||||
Foreign currency translation loss | 15,675 | 15,810 | 801,357 | 634,990 | ||||||||||||
Equity in loss of associates | 15,390 | 6,268 | 28,386 | 22,493 | ||||||||||||
Loss on disposal of equity method investment securities | 143 | 549 | 137 | 109 | ||||||||||||
Loss on impairment of equity method investment securities | — | — | 2,654 | 2,103 | ||||||||||||
Loss on disposal of short-term investment assets | — | — | 1,004 | 796 | ||||||||||||
Loss on valuation of short-term investment assets | — | — | 1,841 | 1,459 | ||||||||||||
Loss on disposal of available-for-sale securities | 5,161 | 603 | 250 | 198 | ||||||||||||
Loss on impairment of available-for-sale securities | 4,185 | 1,809 | 3,826 | 3,032 | ||||||||||||
Loss on impairment of investment assets | 899 | 139 | 2,677 | 2,121 | ||||||||||||
Loss on disposal of property and equipment | 108,290 | 94,604 | 94,308 | 74,729 | ||||||||||||
Loss on impairment of property and equipment | 1,555 | 7,990 | 20,676 | 16,384 | ||||||||||||
Loss on disposal of intangible assets | 1,541 | 535 | 1,653 | 1,310 | ||||||||||||
Loss on impairment of intangible assets | 10,885 | 8,957 | 17,435 | 13,815 | ||||||||||||
Loss on valuation of derivatives | 86,715 | 15,542 | 10,936 | 8,666 | ||||||||||||
Other non-operating expenses | 2,675 | 15,943 | 16,935 | 13,418 | ||||||||||||
Sub-total | 4,270,216 | 4,287,242 | 5,289,693 | 4,191,516 | ||||||||||||
Income not involving cash receipts: | ||||||||||||||||
Interest income | 8,432 | 6,380 | 20,964 | 16,612 | ||||||||||||
Foreign currency translation gain | 130,038 | 8,279 | 40,490 | 32,084 | ||||||||||||
Equity in income of associates | 8,685 | 24,250 | 16,061 | 12,727 | ||||||||||||
Gain on disposal of short-term investment assets | 880 | 2,052 | 446 | 353 | ||||||||||||
Gain on valuation of short-term investment assets | 158 | 1,085 | 537 | 426 | ||||||||||||
Gain on disposal of available-for-sale securities | 83,605 | 9,479 | 3,996 | 3,166 | ||||||||||||
Reversal of impairment losses of available-for-sale securities | 227 | 76 | — | — | ||||||||||||
Reversal of impairment losses of held-to-maturity securities | 12,493 | — | — | — | ||||||||||||
Gain on disposal of equity method investment securities | 5,029 | 1,832 | 1 | 1 | ||||||||||||
Gain on disposal of property and equipment | 8,953 | 29,382 | 5,391 | 4,272 | ||||||||||||
Gain on disposal of intangible assets | 131 | 221 | 1,000 | 792 | ||||||||||||
Amortization of negative goodwill | 518 | 518 | 65 | 52 | ||||||||||||
Gain on valuation of derivatives | 8,654 | 40,140 | 650,680 | 515,594 | ||||||||||||
Other non-operating revenues | — | 4,373 | 2,780 | 2,202 | ||||||||||||
Sub-total | (267,803 | ) | (128,067 | ) | (742,411 | ) | (588,281 | ) | ||||||||
F-8
Table of Contents
(Note 2) | ||||||||||||||||
2006 | 2007 | 2008 | 2008 | |||||||||||||
In millions of Korean won | In thousands of | |||||||||||||||
U.S. dollars | ||||||||||||||||
Changes in assets and liabilities related to operating activities: | ||||||||||||||||
Accounts receivable — trade | 88,336 | (463,325 | ) | (367,263 | ) | (291,017 | ) | |||||||||
Loans | 33,134 | (228,022 | ) | (71,188 | ) | (56,409 | ) | |||||||||
Current finance lease receivables | — | 75,577 | 78,103 | 61,888 | ||||||||||||
Accounts receivable — other | (26,848 | ) | 123,167 | 20,460 | 16,212 | |||||||||||
Accrued revenues | 791 | (2,538 | ) | (7,676 | ) | (6,082 | ) | |||||||||
Advance payments | 45,414 | (25,946 | ) | (6,919 | ) | (5,483 | ) | |||||||||
Prepaid expenses | (8,343 | ) | (12,522 | ) | (44,282 | ) | (35,089 | ) | ||||||||
Prepaid income taxes | — | (223 | ) | (107 | ) | (85 | ) | |||||||||
Guarantee deposits | 904 | (7,195 | ) | 8,026 | 6,360 | |||||||||||
Derivative instruments, net | (35,807 | ) | (3,381 | ) | 166 | 132 | ||||||||||
Deferred income tax, net | 74,351 | (45,506 | ) | (126,811 | ) | (100,484 | ) | |||||||||
Other current assets | (151 | ) | (77 | ) | (173 | ) | (137 | ) | ||||||||
Inventories | 140,036 | (65,106 | ) | (131,305 | ) | (104,045 | ) | |||||||||
Leasehold rights and deposits | (953 | ) | (36,349 | ) | (3,804 | ) | (3,014 | ) | ||||||||
Long-term accounts receivable — trade | 159,544 | 97,729 | (253,257 | ) | (200,679 | ) | ||||||||||
Long-term loans | (192,656 | ) | (7,326 | ) | (113,229 | ) | (89,722 | ) | ||||||||
Non-current finance lease receivables | — | (109,895 | ) | (299,257 | ) | (237,129 | ) | |||||||||
Long-term accounts receivable — other | 183 | (26,910 | ) | (8,146 | ) | (6,455 | ) | |||||||||
Other non-current assets | — | (8,778 | ) | (19,536 | ) | (15,480 | ) | |||||||||
Accounts payable — trade | (132,168 | ) | 239,238 | (262,733 | ) | (208,188 | ) | |||||||||
Accounts payable — other | 153,661 | (242,595 | ) | (160,717 | ) | (127,351 | ) | |||||||||
Advance receipts | (420 | ) | (30,293 | ) | 31,905 | 25,281 | ||||||||||
Withholdings | 16,046 | 25,650 | 26,901 | 21,316 | ||||||||||||
Accrued expenses | (35,593 | ) | 67,302 | 44,402 | 35,184 | |||||||||||
Income taxes payable | 184,726 | (86,281 | ) | (152,286 | ) | (120,670 | ) | |||||||||
Unearned revenue | (672 | ) | 2,512 | 1,363 | 1,080 | |||||||||||
Key money deposits | 7,967 | 4,049 | 77,868 | 61,702 | ||||||||||||
Accrued provisions | (6,110 | ) | (29,931 | ) | 18,500 | 14,659 | ||||||||||
Other current liabilities | 3,091 | (1,143 | ) | (6,782 | ) | (5,374 | ) | |||||||||
Payment of severance indemnities | (79,533 | ) | (103,955 | ) | (220,800 | ) | (174,960 | ) | ||||||||
Deposits for severance indemnities | (151,773 | ) | (132,471 | ) | (148,848 | ) | (117,946 | ) | ||||||||
Contribution to National Pension Fund | 109 | (51 | ) | 122 | 97 | |||||||||||
Refundable deposits for telephone installation | (49,670 | ) | (66,145 | ) | (59,437 | ) | (47,097 | ) | ||||||||
Long-term accounts payable — trade | — | — | 30,794 | 24,401 | ||||||||||||
Long-term accounts payable — other | (6,446 | ) | — | (24,833 | ) | (19,677 | ) | |||||||||
Other non-current liabilities | 20,296 | 35,153 | 8,949 | 7,090 | ||||||||||||
Sub-total | 201,446 | (1,065,587 | ) | (2,141,830 | ) | (1,697,171 | ) | |||||||||
Net Cash Provided by Operating Activities | 5,713,576 | 4,264,566 | 2,918,742 | 2,312,791 | ||||||||||||
F-9
Table of Contents
(Note 2) | ||||||||||||||||
2006 | 2007 | 2008 | 2008 | |||||||||||||
In millions of Korean won | In thousands of | |||||||||||||||
U.S. dollars | ||||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES : | ||||||||||||||||
Cash inflows from investing activities : | ||||||||||||||||
Decrease in short-term investment assets | 728,351 | 182,501 | 544,946 | 431,811 | ||||||||||||
Disposal of available-for-sale securities | 19,303 | 1,183,121 | 614,822 | 487,181 | ||||||||||||
Decrease in equity method investment securities | 7,001 | 10,807 | 1,047 | 830 | ||||||||||||
Disposal of equity method investment securities | — | 1,580 | 1,252 | |||||||||||||
Collection of held-to-maturity securities | 607 | 252 | 65 | 51 | ||||||||||||
Collection of long-term loans to employees | 12,649 | 25,736 | 10,001 | 7,925 | ||||||||||||
Disposal of long-term financial instruments | — | 2,819 | 2,234 | |||||||||||||
Decrease in other investment assets | 760 | 3,480 | 5,630 | 4,461 | ||||||||||||
Disposal of land | 14,757 | 15,246 | 9,222 | 7,307 | ||||||||||||
Disposal of buildings | 13,892 | 4,791 | 17,650 | 13,986 | ||||||||||||
Disposal of structures | 377 | 17 | 4,674 | 3,704 | ||||||||||||
Disposal of machinery | 18,643 | 68,889 | 4,665 | 3,696 | ||||||||||||
Disposal of vehicles | 2,005 | 16,536 | 665 | 527 | ||||||||||||
Disposal of other property and equipment | 8,403 | 13,978 | 19,463 | 15,422 | ||||||||||||
Disposal ofconstruction-in-progress | 902 | 10 | 26 | 21 | ||||||||||||
Increase of contribution for construction | 66,368 | 76,625 | 74,228 | 58,818 | ||||||||||||
Disposal of intangible assets | — | 706 | 17,013 | 13,481 | ||||||||||||
Sub-total | 894,018 | 1,602,695 | 1,328,516 | 1,052,707 | ||||||||||||
Cash outflows for investing activities : | ||||||||||||||||
Acquisition of short-term investment assets | 31,200 | 61,397 | 343,115 | 271,882 | ||||||||||||
Acquisition of available-for-sale securities | 150,150 | 989,112 | 714,831 | 566,427 | ||||||||||||
Acquisition of equity method investment securities | 11,140 | 7,220 | 123,371 | 97,758 | ||||||||||||
Acquisition of assets and liabilities of consolidated subsidiaries | — | 124,384 | 55,655 | 44,101 | ||||||||||||
Acquisition of held-to-maturity securities | 281 | 5 | 13,988 | 11,084 | ||||||||||||
Increase in long-term loans to employees | 10,005 | 25,451 | 50,421 | 39,953 | ||||||||||||
Increase in long-term financial instruments | 1,089 | 18 | 11 | 9 | ||||||||||||
Increase in other investment assets | 23,938 | 19,826 | 6,245 | 4,948 | ||||||||||||
Acquisition of land | 304 | 1,424 | 225 | 178 | ||||||||||||
Acquisition of buildings | 910 | 3,398 | 38,787 | 30,735 | ||||||||||||
Acquisition of structures | 148 | 122 | 482 | 382 | ||||||||||||
Acquisition of machinery | 72,420 | 65,188 | 67,543 | 53,521 | ||||||||||||
Acquisition of vehicles | 2,076 | 990 | 33,161 | 26,277 | ||||||||||||
Acquisition of other property and equipment | 118,464 | 258,167 | 134,534 | 106,604 | ||||||||||||
Acquisition ofconstruction-in-progress | 3,323,375 | 3,306,356 | 3,087,737 | 2,446,701 | ||||||||||||
Acquisition of intangible assets | 209,433 | 188,995 | 189,772 | 150,374 | ||||||||||||
Sub-total | (3,954,933 | ) | (5,052,053 | ) | (4,859,878 | ) | (3,850,934 | ) | ||||||||
Net Cash Used in Investing Activities | (3,060,915 | ) | (3,449,358 | ) | (3,531,362 | ) | (2,798,227 | ) | ||||||||
F-10
Table of Contents
(Note 2) | ||||||||||||||||
2006 | 2007 | 2008 | 2008 | |||||||||||||
In millions of Korean won | In thousands of | |||||||||||||||
U.S. dollars | ||||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||
Cash inflows from financing activities : | ||||||||||||||||
Increase in short-term borrowings | 179,748 | 49,601 | 455,117 | 360,632 | ||||||||||||
Issuance of bonds | 208,680 | 777,981 | 2,405,577 | 1,906,163 | ||||||||||||
Increase in long-term borrowings | 76,423 | 100,104 | 1,374,480 | 1,089,128 | ||||||||||||
Inflows from capital transactions of consolidated entities | 7,698 | 2,128 | 7,951 | 6,300 | ||||||||||||
Sub-total | 472,549 | 929,814 | 4,243,125 | 3,362,223 | ||||||||||||
Cash outflows for financing activities : | ||||||||||||||||
Repayment of short-term borrowings | 109,252 | — | 412,579 | 326,925 | ||||||||||||
Payment of accounts payable — other | — | 118,470 | 29,764 | 23,585 | ||||||||||||
Repayment of current portion of bonds and long-term borrowings | 1,207,144 | 1,353,689 | 2,146,790 | 1,701,101 | ||||||||||||
Repayment of long-term borrowings | 42,543 | 132 | 697 | 552 | ||||||||||||
Repayment of bonds | 34,300 | 5,000 | — | — | ||||||||||||
Increase in accounts receivable — trade | 200,000 | — | — | — | ||||||||||||
Payment of dividends | 426,113 | 472,774 | 409,270 | 324,303 | ||||||||||||
Loss on translation of foreign operations | 10,131 | — | — | — | ||||||||||||
Acquisition of treasury stock | 213,664 | 196,329 | 73,807 | 58,484 | ||||||||||||
Outflows for capital transactions of consolidated entities | 596,566 | 151,666 | 118,868 | 94,190 | ||||||||||||
Sub-total | (2,839,713 | ) | (2,298,060 | ) | (3,191,775 | ) | (2,529,140 | ) | ||||||||
Net Cash Provided by (Used in) Financing Activities | (2,367,164 | ) | (1,368,246 | ) | 1,051,350 | 833,083 | ||||||||||
EFFECT OF CHANGES IN CONSOLIDATED ENTITIES | (3,571 | ) | 108,992 | 48,482 | 38,417 | |||||||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | — | 462 | 18,721 | 14,834 | ||||||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 281,926 | (443,584 | ) | 505,933 | 400,898 | |||||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR | 1,546,643 | 1,828,569 | 1,384,985 | 1,097,452 | ||||||||||||
CASH AND CASH EQUIVALENTS AT END OF THE YEAR | 1,828,569 | 1,384,985 | 1,890,918 | $ | 1,498,350 | |||||||||||
F-11
Table of Contents
Other | ||||||||||||||||||||||||||||
Common | Capital | Capital | Comprehensive | Retained | Minority | |||||||||||||||||||||||
Stock | Surplus | Adjustments | Income (Loss) | Earnings | Interest | Total | ||||||||||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||||||||||
Balance as of January 1, 2006 (as reported) | 1,560,998 | 1,391,432 | (3,870,288 | ) | 3,166 | 8,786,413 | 2,518,213 | 10,389,934 | ||||||||||||||||||||
Cumulative effect of changes in accounting policies (Note 2) | — | 48,826 | (48,826 | ) | — | — | — | — | ||||||||||||||||||||
As restated | 1,560,998 | 1,440,258 | (3,919,114 | ) | 3,166 | 8,786,413 | 2,518,213 | 10,389,934 | ||||||||||||||||||||
Dividends | — | — | — | — | (426,113 | ) | (67,814 | ) | (493,927 | ) | ||||||||||||||||||
Retained earnings after appropriations | 8,360,300 | 2,450,399 | 9,896,007 | |||||||||||||||||||||||||
Net income for the period | — | — | — | — | 1,291,863 | 217,854 | 1,509,717 | |||||||||||||||||||||
Disposal of treasury stock | — | 652 | 13,913 | — | — | — | 14,565 | |||||||||||||||||||||
Retirement of treasury stock | — | — | — | — | (213,664 | ) | — | (213,664 | ) | |||||||||||||||||||
Appropriation of loss on disposal of treasury stock | — | — | 38,431 | — | (38,431 | ) | — | — | ||||||||||||||||||||
Acquisition of subsidiaries’ stock | — | — | (94,435 | ) | — | — | (269,433 | ) | (363,868 | ) | ||||||||||||||||||
Disposal of subsidiaries’ treasury stock | — | — | 5,646 | — | — | 2,052 | 7,698 | |||||||||||||||||||||
Appropriation of subsidiaries’ treasury stock | — | — | (22,130 | ) | — | — | (142,754 | ) | (164,884 | ) | ||||||||||||||||||
Retirement of subsidiaries’ treasury stock | — | — | 10,848 | — | — | (10,848 | ) | — | ||||||||||||||||||||
Changes in consolidated entities | — | — | — | — | — | 20,492 | 20,492 | |||||||||||||||||||||
Stock options | — | — | 227 | — | — | (158 | ) | 69 | ||||||||||||||||||||
Other share-based payments | — | — | 462 | — | — | — | 462 | |||||||||||||||||||||
Gain (loss) in translation of foreign operations | — | — | — | (10,520 | ) | — | 389 | (10,131 | ) | |||||||||||||||||||
Gain on valuation of available-for-sale securities | — | — | — | (1,130 | ) | — | (796 | ) | (1,926 | ) | ||||||||||||||||||
Increase in equity of associates | — | — | — | 2,712 | — | 55 | 2,767 | |||||||||||||||||||||
Balance as of December 31, 2006 | 1,560,998 | 1,440,910 | (3,966,152 | ) | (5,772 | ) | 9,400,068 | 2,267,252 | 10,697,304 | |||||||||||||||||||
F-12
Table of Contents
Other | ||||||||||||||||||||||||||||
Common | Capital | Capital | Comprehensive | Retained | Minority | |||||||||||||||||||||||
Stock | Surplus | Adjustments | Income (Loss) | Earnings | Interest | Total | ||||||||||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||||||||||
Balance as of January 1, 2007 (as reported) | 1,560,998 | 1,292,475 | (3,817,717 | ) | (5,772 | ) | 9,400,068 | 2,267,252 | 10,697,304 | |||||||||||||||||||
Cumulative effect of changes in accounting policies | ||||||||||||||||||||||||||||
(Note 2) | — | 148,435 | (148,435 | ) | — | — | — | — | ||||||||||||||||||||
As restated | 1,560,998 | 1,440,910 | (3,966,152 | ) | (5,772 | ) | 9,400,068 | 2,267,252 | 10,697,304 | |||||||||||||||||||
Dividends | — | — | — | — | (416,191 | ) | (56,583 | ) | (472,774 | ) | ||||||||||||||||||
Retained earnings after appropriations | — | — | — | — | 8,983,877 | 2,210,669 | 10,224,530 | |||||||||||||||||||||
Net income for the year | — | — | — | — | 1,056,227 | 114,751 | 1,170,978 | |||||||||||||||||||||
Acquisition of treasury stock | — | — | (196,329 | ) | — | — | — | (196,329 | ) | |||||||||||||||||||
Disposal of treasury stock | — | — | 884 | — | — | — | 884 | |||||||||||||||||||||
Retirement of treasury stock | — | — | 196,329 | — | (196,329 | ) | — | — | ||||||||||||||||||||
Gain (loss) on disposal of treasury stock | — | (133 | ) | — | — | — | — | (133 | ) | |||||||||||||||||||
Acquisition of subsidiaries’ stock | — | — | (1,152 | ) | — | — | (365 | ) | (1,517 | ) | ||||||||||||||||||
Increase in subsidiaries’ capital stock | — | — | 212 | — | — | 1,916 | 2,128 | |||||||||||||||||||||
Acquisition of subsidiaries’ treasury stock | — | — | (392 | ) | — | — | (620 | ) | (1,012 | ) | ||||||||||||||||||
Appropriation of subsidiaries’ treasury stock | — | — | (14,489 | ) | — | — | (79,582 | ) | (94,071 | ) | ||||||||||||||||||
Changes in consolidated entities | — | — | (3,302 | ) | (20,688 | ) | — | 25,096 | 1,106 | |||||||||||||||||||
Stock options | — | — | 25 | — | — | — | 25 | |||||||||||||||||||||
Other share-based payment | — | — | 1,022 | — | — | — | 1,022 | |||||||||||||||||||||
Other capital adjustments | — | — | (585 | ) | — | — | (687 | ) | (1,272 | ) | ||||||||||||||||||
Gain on translation of foreign operations | — | — | — | 55 | — | — | 55 | |||||||||||||||||||||
Loss on translation of foreign operations | — | — | — | 19,240 | — | 2,896 | 22,136 | |||||||||||||||||||||
Unrealized gain on valuation of available-for-sale Securities | — | — | — | 2,496 | — | 1,668 | 4,164 | |||||||||||||||||||||
Gain on valuation of derivatives for cash flow hedge | — | — | — | 2,024 | — | — | 2,024 | |||||||||||||||||||||
Increase in equity of associates | — | — | — | (975 | ) | — | 261 | (714 | ) | |||||||||||||||||||
Decrease in equity of associates | — | — | — | 3,762 | — | — | 3,762 | |||||||||||||||||||||
Balance as of December 31, 2007 | 1,560,998 | 1,440,777 | (3,983,929 | ) | 142 | 9,843,775 | 2,276,003 | 11,137,766 | ||||||||||||||||||||
F-13
Table of Contents
Other | ||||||||||||||||||||||||||||
Common | Capital | Capital | Comprehensive | Retained | Minority | |||||||||||||||||||||||
Stock | Surplus | Adjustments | Income (Loss) | Earnings | Interest | Total | ||||||||||||||||||||||
(In millions of Korean won) | ||||||||||||||||||||||||||||
Balance as of January 1, 2008 (as reported) | 1,560,998 | 1,272,634 | (3,815,786 | ) | 142 | 9,843,775 | 2,276,003 | 11,137,766 | ||||||||||||||||||||
Cumulative effect of changes in accounting policies | ||||||||||||||||||||||||||||
(Note 2) | — | 168,143 | (168,143 | ) | — | 1,711 | 2,141 | 3,852 | ||||||||||||||||||||
As restated | 1,560,998 | 1,440,777 | (3,983,929 | ) | 142 | 9,845,486 | 2,278,144 | 11,141,618 | ||||||||||||||||||||
Dividends | — | — | — | — | (407,374 | ) | (1,896 | ) | (409,270 | ) | ||||||||||||||||||
Retained earnings after appropriations | — | — | — | — | 9,438,112 | 2,276,248 | 10,732,348 | |||||||||||||||||||||
Net income for the year | — | — | — | — | 449,810 | 63,480 | 513,290 | |||||||||||||||||||||
Acquisition of treasury stock | — | — | (73,807 | ) | — | — | — | (73,807 | ) | |||||||||||||||||||
Disposal of treasury stock | — | — | 807 | — | — | — | 807 | |||||||||||||||||||||
Retirement of treasury stock | — | — | 73,807 | — | (73,807 | ) | — | — | ||||||||||||||||||||
Gain (loss) on disposal of treasury stock | — | (144 | ) | — | — | — | — | (144 | ) | |||||||||||||||||||
Acquisition of subsidiaries’ stock | — | — | (944 | ) | — | — | (210 | ) | (1,154 | ) | ||||||||||||||||||
Increase in subsidiaries’ capital stock | — | — | 2,439 | — | — | 13,428 | 15,867 | |||||||||||||||||||||
Acquisition of subsidiaries’ treasury stock | — | — | 158 | — | — | 140 | 298 | |||||||||||||||||||||
Appropriation of subsidiaries’ treasury stock | — | — | (14,651 | ) | — | — | (112,298 | ) | (126,949 | ) | ||||||||||||||||||
Changes in consolidated entities | — | — | — | — | — | 14,964 | 14,964 | |||||||||||||||||||||
Other share-based payment | — | — | 398 | — | — | — | 398 | |||||||||||||||||||||
Other capital adjustments | — | — | 986 | — | — | 221 | 1,207 | |||||||||||||||||||||
Gain on translation of foreign operations | — | — | — | 8,612 | — | 4,947 | 13,559 | |||||||||||||||||||||
Loss on translation of foreign operations | — | — | — | 8,308 | — | 3,471 | 11,779 | |||||||||||||||||||||
Unrealized gain on valuation of available-for-sale Securities | — | — | — | (5,831 | ) | — | (3,108 | ) | (8,939 | ) | ||||||||||||||||||
Unrealized loss on valuation of available-for-sale securities | — | — | — | (4,345 | ) | — | (3,200 | ) | (7,545 | ) | ||||||||||||||||||
Gain on valuation of derivatives for cash flow hedge | — | — | — | 9,112 | — | 262 | 9,374 | |||||||||||||||||||||
Loss on valuation of derivatives for cash flow hedge | — | — | — | (13,710 | ) | — | (4,660 | ) | (18,370 | ) | ||||||||||||||||||
Increase in equity of associates | — | — | — | 7,603 | — | 2,351 | 9,954 | |||||||||||||||||||||
Decrease in equity of associates | — | — | — | 988 | — | (27 | ) | 961 | ||||||||||||||||||||
Balance as of December 31, 2008 | 1,560,998 | 1,440,633 | (3,994,736 | ) | 10,879 | 9,814,115 | 2,256,009 | 11,087,898 | ||||||||||||||||||||
F-14
Table of Contents
Other | ||||||||||||||||||||||||||||
Common | Capital | Capital | Comprehensive | Retained | Noncontrolling | |||||||||||||||||||||||
Stock | Surplus | Adjustments | Income (Loss) | Earnings | Interest | Total | ||||||||||||||||||||||
(In thousands of U.S. dollars) | ||||||||||||||||||||||||||||
Balance as of January 1, 2008 (as reported) | $ | 1,236,924 | $ | 1,008,426 | $ | (3,023,602 | ) | $ | 113 | $ | 7,800,138 | $ | 1,803,489 | $ | 8,825,488 | |||||||||||||
Cumulative effect of changes in accounting policies (Note 2) | — | 133,236 | (133,236 | ) | — | 1,356 | 1,696 | 3,052 | ||||||||||||||||||||
As restated Dividends | 1,236,924 | 1,141,662 | (3,156,838 | ) | 113 | 7,801,494 | 1,805,185 | 8,828,540 | ||||||||||||||||||||
Retained earnings after appropriations | — | — | — | — | (322,800 | ) | (1,502 | ) | (324,302 | ) | ||||||||||||||||||
Net income for the year | — | — | — | — | 7,478,694 | 1,803,683 | 8,504,238 | |||||||||||||||||||||
Acquisition of treasury stock | — | — | — | — | 356,426 | 50,301 | 406,727 | |||||||||||||||||||||
Disposal of treasury stock | — | — | (58,484 | ) | — | — | — | (58,484 | ) | |||||||||||||||||||
Retirement of treasury stock | — | — | 640 | — | — | — | 640 | |||||||||||||||||||||
Gain (loss) on disposal of treasury stock | — | — | 58,484 | — | (58,484 | ) | — | — | ||||||||||||||||||||
Acquisition of subsidiaries’ stock | — | (114 | ) | — | — | — | — | (114 | ) | |||||||||||||||||||
Increase in subsidiaries’ capital stock | — | — | (748 | ) | — | — | (166 | ) | (914 | ) | ||||||||||||||||||
Acquisition of subsidiaries’ treasury stock | — | — | 1,933 | — | — | 10,640 | 12,573 | |||||||||||||||||||||
Appropriation of subsidiaries’ treasury stock | — | — | 125 | — | — | 111 | 236 | |||||||||||||||||||||
Changes in consolidated entities | — | — | (11,609 | ) | — | — | (88,984 | ) | (100,593 | ) | ||||||||||||||||||
Other share-based payment | — | — | — | — | — | 11,857 | 11,857 | |||||||||||||||||||||
Other capital adjustments | — | — | 315 | — | — | — | 315 | |||||||||||||||||||||
Gain on translation of foreign operations | — | — | 781 | — | — | 175 | 956 | |||||||||||||||||||||
Loss on translation of foreign operations | — | — | — | 6,824 | — | 3,920 | 10,744 | |||||||||||||||||||||
Unrealized gain on valuation of available-for-sale Securities | — | — | — | 6,583 | — | 2,751 | 9,334 | |||||||||||||||||||||
Unrealized loss on valuation of available-for-sale securities | — | — | — | (4,620 | ) | — | (2,463 | ) | (7,083 | ) | ||||||||||||||||||
Gain on valuation of derivatives for cash flow hedge | — | — | — | (3,443 | ) | — | (2,536 | ) | (5,979 | ) | ||||||||||||||||||
Loss on valuation of derivatives for cash flow hedge | — | — | — | 7,220 | — | 208 | 7,428 | |||||||||||||||||||||
Increase in equity of associates | — | — | — | (10,864 | ) | — | (3,693 | ) | (14,557 | ) | ||||||||||||||||||
Decrease in equity of associates | — | — | — | 6,024 | — | 1,863 | 7,887 | |||||||||||||||||||||
Balance as of December 31, 2008 | $ | 1,236,924 | $ | 1,141,548 | $ | (3,165,401 | ) | $ | 8,620 | $ | 7,776,636 | $ | 1,787,646 | $ | 8,785,973 | |||||||||||||
F-15
Table of Contents
1. | ORGANIZATION AND DESCRIPTION OF THE BUSINESS |
a. | Parent |
Number of | Ownership | |||||||
Shares | Percentage (%) | |||||||
Employee Stock Ownership Association | 13,184,421 | 4.82 | % | |||||
National Pension Service | 16,179,637 | 5.92 | % | |||||
Others | 172,667,439 | 63.12 | % | |||||
Treasury stock | 71,500,404 | 26.14 | % | |||||
Total | 273,535,700 | 100.00 | % | |||||
F-16
Table of Contents
b. | Consolidated Subsidiaries |
Year of | ||||||||||||||||
Year of | Obtaining | Financial | ||||||||||||||
Subsidiary | Incorporation | Control | Primary Business | Location | Year End | |||||||||||
KT Powertel Co., Ltd. (“KTP”) | 1985 | 1985 | Trunk radio system business | Korea | Dec.31 | |||||||||||
KT Networks Corporation (“KTN”) | 1986 | 1986 | Group telephone management | Korea | Dec.31 | |||||||||||
KT Linkus Co., Ltd. (“KTL”) | 1988 | 1988 | Public telephone maintenance | Korea | Dec.31 | |||||||||||
KT Hitel Co., Ltd. (“KTH”) | 1991 | 1992 | Data communication | Korea | Dec.31 | |||||||||||
KT Submarine Co., Ltd. (“KTSC”) | 1995 | 1995 | Submarine cable construction and maintenance | Korea | Dec.31 | |||||||||||
KT Freetel Co., Ltd. (“KTF”) | 1997 | 1997 | PCS business | Korea | Dec.31 | |||||||||||
KT Commerce Inc. (“KTC”) | 2002 | 2002 | B2C, B2B service | Korea | Dec.31 | |||||||||||
KTF Technologies Inc. (“KTFT”) | 2001 | 2002 | PCS handset development | Korea | Dec.31 | |||||||||||
KT Internal Venture Fund No. 2 | 2003 | 2003 | Investment fund | Korea | Feb.28 | |||||||||||
KTF M Hows Co., Ltd. (“KTF M Hows”) | 2004 | 2004 | Mobile marketing | Korea | Dec.31 | |||||||||||
KT Rental Co., Ltd. (“KTR”) | 2005 | 2005 | Rental service | Korea | Dec.31 | |||||||||||
Sidus FNH Corporation (“Sidus FNH”) | 2005 | 2005 | Movie production | Korea | Dec.31 | |||||||||||
Sidus FNH Benex Cinema Investment Fund | 2006 | 2006 | Movie investment fund | Korea | Dec.31 | |||||||||||
KT Capital Co., Ltd. (“KT Capital”) | 2006 | 2006 | Financing service | Korea | Dec.31 | |||||||||||
Telecop Service Co., Ltd. (“TSC”) | 2006 | 2006 | Security service | Korea | Dec.31 | |||||||||||
Olive Nine Co., Ltd. (“Olive Nine”) | 1999 | 2006 | Broad casting production | Korea | Dec.31 | |||||||||||
KTF M&S Co., Ltd. (“KTF M&S”) | 2007 | 2007 | PCS distribution | Korea | Dec.31 | |||||||||||
KT FDS Co., Ltd. (“KT FDS”) | 1990 | 2007 | Software development and system integration | Korea | Dec.31 | |||||||||||
KTF Music Corporation (“KTF Music” formerly, Bluecord Technology Co., Ltd.) | 1991 | 2007 | Semiconductor and telecommunication equipment manufacture | Korea | Dec.31 | |||||||||||
Doremi Media Co., Ltd. (“Doremi Media”) | 1997 | 2007 | Recording device (magneto-optical disk) and music disc manufacture | Korea | Dec.31 | |||||||||||
Nasmedia, Inc. (“Nasmedia”) | 2000 | 2008 | Online advertisement | Korea | Dec.31 | |||||||||||
Sofnics, Inc.(“Sofnics”) | 2008 | 2008 | Software development and sales | Korea | Dec.31 | |||||||||||
JungBoPremiumEdu Co., Ltd. (“JB Edu”) | 2008 | 2008 | Online education business | Korea | �� | Dec.31 | ||||||||||
KT New Business Fund No. 1 | 2008 | 2008 | Investment fund | Korea | Dec.31 | |||||||||||
KT DataSystems Co., Ltd. (“KTDS”) | 2008 | 2008 | System integration and maintenance | Korea | Dec.31 | |||||||||||
Korea Telecom America, Inc. (“KTAI”) | 1993 | 1993 | Foreign telecommunication business | America | Dec.31 | |||||||||||
New Telephone Company, Inc. (“NTC”) | 1993 | 1998 | Foreign telecommunication business | Russia | Dec.31 | |||||||||||
Korea Telecom Japan Co., Ltd. (“KTJ”) | 1999 | 1999 | Foreign telecommunication business | Japan | Dec.31 | |||||||||||
Korea Telecom China Co., Ltd. (“KTCC”) | 2003 | 2003 | Foreign telecommunication business | China | Dec.31 | |||||||||||
PT. KTF Indonesia | 2005 | 2005 | Foreign telecommunication business | Indonesia | Dec.31 | |||||||||||
Super iMax | 2007 | 2007 | Wireless high speed internet business | Uzbekistan | Dec.31 | |||||||||||
East Telecom | 2003 | 2007 | Fixed line telecommunication business | Uzbekistan | Dec.31 | |||||||||||
KTSC Investment Management B.V. | 2007 | 2007 | Management of investment in Super iMax and East Telecom | Netherlands | Dec.31 |
F-17
Table of Contents
Year of | Ownership percentage (%) | |||||||||||||||||
Subsidiary | Establishment | Primary Business | 2006 | 2007 | 2008 | |||||||||||||
KTP | 1985 | Trunk radio system business | 44.85 | % | 44.85 | % | 44.85 | % | ||||||||||
KTN | 1986 | Group telephone management | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||
KTL | 1988 | Public telephone maintenance | 93.82 | % | 93.82 | % | 93.82 | % | ||||||||||
KTH | 1991 | Data communication | 65.94 | % | 65.94 | % | 65.94 | % | ||||||||||
KTSC | 1995 | Submarine cable construction and maintenance | 36.92 | % | 36.92 | % | 36.92 | % | ||||||||||
KTF (Note 1) | 1997 | PCS Business | 52.19 | % | 52.99 | % | 54.25 | % | ||||||||||
KTC (Note 2) | 2002 | B2C, B2B service | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||
KTFT | 2001 | PCS handset development | 74.94 | % | 78.79 | % | 78.79 | % | ||||||||||
KT Internal Venture Fund No. 2 | 2003 | Investment fund | 94.34 | % | 94.34 | % | 94.34 | % | ||||||||||
KTF M Hows (Note 3) | 2004 | Mobile marketing | 51.00 | % | 51.00 | % | 51.00 | % | ||||||||||
KTR | 2005 | Rental service | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||
Sidus FNH (Note 4) | 2005 | Movie production | 51.00 | % | 51.00 | % | 51.00 | % | ||||||||||
Sidus FNH Benex Cinema Investment Fund (Note 5) | 2006 | Movie investment fund | 43.33 | % | 43.33 | % | 43.33 | % | ||||||||||
KT Capital (Note 6) | 2006 | Financing service | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||
TSC (Note 7) | 2006 | Security service | 93.82 | % | 93.82 | % | 90.12 | % | ||||||||||
Olive Nine. (Note 8) | 1999 | Broadcasting production | 19.68 | % | 19.20 | % | 19.48 | % | ||||||||||
KTF M&S (Note 9) | 2007 | PCS distribution | — | 100.00 | % | 100.00 | % | |||||||||||
KT FDS | 1990 | Software development and system integration | — | 100.00 | % | 100.00 | % | |||||||||||
KTF Music (formerly, Bluecord Technology Co.,Ltd.) (Note 10) | 1991 | Semiconductor and telecommunication equipment manufacture | — | 35.28 | % | 35.28 | % | |||||||||||
Doremi Media (Note 11) | 1997 | Recording device (magneto-optical disk) and music disc manufacture | — | 64.24 | % | 64.24 | % | |||||||||||
Nasmedia (Note 12) | 2008 | Online advertisement | — | — | 50.00 | % | ||||||||||||
Sofnics (Note 13) | 2008 | Software development and sales | — | — | 60.00 | % | ||||||||||||
JB Edu (Note 14) | 2008 | Online education business | — | — | 54.55 | % | ||||||||||||
KT New Business Fund No. 1 (Note 15) | 2008 | Investment fund | — | — | 100.00 | % | ||||||||||||
KTDS (Note 16) | 2008 | System integration and maintenance | — | — | 100.00 | % | ||||||||||||
KTAI | 1993 | Foreign telecommunication business | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||
NTC | 1993 | Foreign telecommunication business | 79.96 | % | 79.96 | % | 79.96 | % | ||||||||||
KTJ | 1999 | Foreign telecommunication business | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||
KTCC | 2003 | Foreign telecommunication business | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||
PT. KTF Indonesia (Note 17) | 2005 | Foreign telecommunication business | 99.00 | % | 99.00 | % | 99.00 | % | ||||||||||
Super iMax (Note 18) | 2007 | Wireless high speed internet business | — | 60.00 | % | 100.00 | % | |||||||||||
East Telecom (Note 18) | 2003 | Fixed line telecommunication business | — | 51.00 | % | 85.00 | % | |||||||||||
KTSC Investment Management B.V. (Note 18) | 2007 | Management of investment in Super iMax and East Telecom | — | 60.00 | % | 60.00 | % |
F-18
Table of Contents
(Note 1) | KTF purchased 4,448,000 shares of treasury stock for retirement by a charge against its retained earnings. As a result, the Company’s equity ownership interest in KTF increased from 53.0% to 54.3% as of December 31, 2008. | |
(Note 2) | KTC is owned 19.0% by KT and 81.0% by KTH, respectively. | |
(Note 3) | KTF M Hows is owned 51.0% by KTF. | |
(Note 4) | Sidus FNH is owned 35.7% by KT and 15.3% by KTF, respectively. | |
(Note 5) | Sidus FNH Benex Cinema Investment Fund is owned 13.3% by KT, 6.7% by KTF, 3.3% by KTH and 20.0% by Sidus FNH, respectively. | |
(Note 6) | On December 1, 2006, KTR was spun off into KTR and KT Capital. | |
(Note 7) | During the year ended December 31, 2008, TSC, which was spun off from the KTL on November 14, 2006, issued new shares and accordingly, KT’s ownership interest in TSC has decreased from 93.8% to 90.1% as of December 31, 2008. | |
(Note 8) | As KT holds rights to appoint the majority of the members of the board of directors of Olive Nine, it is determined that Olive Nine is controlled by KT and included in the consolidated subsidiaries. In addition, KT’s ownership interest in Olive Nine increased from 19.2% to 19.5% at December 31, 2008 according to the conversion of convertible bonds and purchase of additional shares. | |
(Note 9) | KTF M&S is owned 100.0% by KTF. | |
(Note 10) | KTF Music (formerly, Bluecord Technology Co., Ltd.) is owned 35.3% by KTF. | |
(Note 11) | Doremi Media is owned 64.2% by KTF Music (formerly, Bluecord Technology Co., Ltd.). | |
(Note 12) | During the year ended December 31, 2008, KT obtained 50.0% ownership interest plus one share of Nasmedia for | |
(Note 13) | During the year ended December 31, 2008, KT obtained 60.0% ownership interest of Sofnics for | |
(Note 14) | During the year ended December 31, 2008, KT obtained 54.6% ownership interest of JB Edu for | |
(Note 15) | During the year ended December 31, 2008, KT and KT Capital obtained 90.9% and 9.1% ownership interests for | |
(Note 16) | During the year ended December 31, 2008, KT and KTF obtained 80.0% and 20.0% ownership interests for | |
(Note 17) | PT. KTF Indonesia is owned 99.0% by KTF. | |
(Note 18) | During the year ended December 31, 2008, KT additionally invested in KTSC Investment Management B.V. cash of |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
a. | Basis of Financial Statement Presentation |
F-19
Table of Contents
b. | Adoption of Statements of Korea Accounting Standards (“SKAS”) |
Accounting Standards | Key Requirements | |
SKAS No. 25 “Consolidated Financial Statements” | • If negative consolidated capital surplus is incurred, it is first charged to related consolidated capital surplus, and remaining amount is recorded as a consolidated capital adjustment. | |
Opinion on Application of Accounting Standards06-2, “Accounting for Recognition of Deferred Tax Related to Investments on a Subsidiary” | • Temporary differences related to investments in subsidiary, equity method investee or joint venture are not classified by origin but are treated as a lump-sum difference in considering whether to recognize deferred tax assets or liabilities. However, temporary differences arising from certain transactions under SKAS No. 16, such as elimination of inter-company transactions through equity method, shall be separately treated in the same way as they are recognized in the consolidated financial statements. |
c. | Cash and Cash Equivalents |
d. | Allowance for Doubtful Accounts |
F-20
Table of Contents
2006 | 2007 | 2008 | ||||||||||
Balance at the beginning of year | 613,873 | 563,164 | 487,729 | |||||||||
Provision | 111,285 | 71,502 | 150,583 | |||||||||
Write-offs | (161,994 | ) | (146,937 | ) | (149,573 | ) | ||||||
Balance at the end of year | 563,164 | 487,729 | 488,739 | |||||||||
e. | Inventories |
f. | Securities (excluding the equity method investment securities) |
F-21
Table of Contents
F-22
Table of Contents
g. | Equity Method Investment Securities |
F-23
Table of Contents
h. | Property and Equipment |
Useful Lives (Years) | ||
Buildings | 5-60 | |
Structures | 5-40 | |
Machinery and equipment: | ||
Underground access to cable tunnels, and concrete and steel telephone poles | 20-40 | |
Machinery | 3-15 | |
Other | 6-15 | |
Vehicles | 3-10 | |
Tools, furniture and fixtures | 2-20 |
F-24
Table of Contents
i. | Intangible Assets |
Useful lives (Years) | ||
Research and development cost | 2-6 | |
Goodwill and negative goodwill | 4-10 | |
Software | 3-6 | |
Industrial rights | 5-10 | |
Frequency usage rights | 5.75 from the date of service commencement or 13 | |
Other intangible assets | 10-50 |
Year Ending December 31, | ||||
2009 | 130,000 | |||
2010 | 150,000 | |||
2011 | 170,000 | |||
Total | 450,000 | |||
F-25
Table of Contents
j. | Contributions for Construction and Others |
k. | Present Value Discount for Assets and Liabilities |
l. | Translation of Assets and Liabilities Denominated in Foreign Currency |
m. | Convertible Bonds |
F-26
Table of Contents
n. | Provisions for Severance Indemnities |
o. | Provisions |
p. | Derivative Instruments |
q. | Share-based Payment |
(i) | Stock Options |
F-27
Table of Contents
(ii) | Other Share-based Payments |
r. | Accounting for Leases |
• | The lease transfers ownership of the asset to the lessee by the end of the lease term; | |
• | The lessee has the option to purchase the asset at a bargain price and it is certain that the option will be exercised; | |
• | The lease term is for the major part (75% or more) of the economic life of the asset even if title is not transferred; | |
• | At the date of lease commencement the present value of the minimum lease payments amounts to at least substantially all (90% or more) of the fair value of the leased asset; or | |
• | The leased assets are of such a specialized nature that only the Company can use them without major modifications. |
(i) | Lessees |
F-28
Table of Contents
(ii) | Lessors |
s. | Revenue Recognition |
t. | Income Taxes |
F-29
Table of Contents
u. | Use of Estimates |
v. | Elimination of Inter-Company Unrealized Gain/Loss |
w. | Translation of Overseas Subsidiaries’ Financial Statements |
x. | Changes in Consolidated Entities |
F-30
Table of Contents
y. | Adoption of New Accounting Standards and Reclassifications of Financial Statements |
As Initially | Adoption of | |||||||||||||||
Reported | SKASs | Reclassification | As Adjusted | |||||||||||||
2006 | ||||||||||||||||
Current assets | 5,980,390 | 1,030 | — | 5,981,420 | ||||||||||||
Non-current assets | 18,241,646 | 20,268 | — | 18,261,914 | ||||||||||||
Total assets | 24,222,036 | 21,298 | — | 24,243,334 | ||||||||||||
Current liabilities | 5,422,088 | 1,027 | — | 5,423,115 | ||||||||||||
Non-current liabilities | 8,102,644 | 20,271 | — | 8,122,915 | ||||||||||||
Total liabilities | 13,524,732 | 21,298 | — | 13,546,030 | ||||||||||||
Common stock | 1,560,998 | — | — | 1,560,998 | ||||||||||||
Capital surplus | 1,289,803 | 148,435 | 2,672 | 1,440,910 | ||||||||||||
Capital adjustments | (3,820,817 | ) | (142,663 | ) | (2,672 | ) | (3,966,152 | ) | ||||||||
Accumulated other comprehensive income | — | (5,772 | ) | — | (5,772 | ) | ||||||||||
Retained earnings | 9,400,068 | — | — | 9,400,068 | ||||||||||||
Minority interest | 2,267,252 | — | — | 2,267,252 | ||||||||||||
Total equity | 10,697,304 | — | — | 10,697,304 | ||||||||||||
Total liabilities and equity | 24,222,036 | 21,298 | — | 24,243,334 | ||||||||||||
Operating revenues | 17,756,156 | — | 68,724 | 17,824,880 | ||||||||||||
Operating expenses | (15,376,920 | ) | 265 | (64,849 | ) | (15,441,504 | ) | |||||||||
Operating income | 2,379,236 | 265 | 3,875 | 2,383,376 | ||||||||||||
Non-operating revenues | 654,235 | (20,346 | ) | (68,724 | ) | 565,165 | ||||||||||
Non-operating expenses | (1,033,708 | ) | 6,164 | 64,849 | (962,695 | ) | ||||||||||
Income from continuing operations before income tax expense | 1,999,763 | (13,917 | ) | — | 1,985,846 | |||||||||||
Income tax expense on continuing operations | (490,046 | ) | 13,921 | — | (476,125 | ) | ||||||||||
Income from continuing operations | 1,509,717 | 4 | — | 1,509,721 | ||||||||||||
Loss from discontinuing operations | — | (4 | ) | — | (4 | ) | ||||||||||
Net income | 1,509,717 | — | — | 1,509,717 | ||||||||||||
Cash flows from operating activities | 5,764,199 | — | (50,623 | ) | 5,713,576 | |||||||||||
Cash flows from investing activities | (3,061,868 | ) | — | 953 | (3,060,915 | ) | ||||||||||
Cash flows from financing activities | (2,416,834 | ) | — | 49,670 | (2,367,164 | ) | ||||||||||
Effect of changes in consolidated entities | (3,571 | ) | — | — | (3,571 | ) | ||||||||||
Net increase in cash and cash equivalents | 281,926 | — | — | 281,926 | ||||||||||||
z. | Basis of Translating Consolidated Financial Statements |
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Table of Contents
3. | RESTRICTED DEPOSITS |
2007 | 2008 | Description | ||||||||||||
Short-term investment assets | Time deposits | 1,904 | 24,687 | Guarantee deposits and others | ||||||||||
Long-term financial instruments | Checking account deposit | 61 | 44 | Checking account deposit and others | ||||||||||
Total | 1,965 | 24,731 | ||||||||||||
4. | INVENTORIES |
2007 | 2008 | |||||||||||||||||||||||
Lower of Cost | Lower of Cost | |||||||||||||||||||||||
or Market | Valuation | or Market | Valuation | |||||||||||||||||||||
Cost | Value | Allowance | Cost | Value | Allowance | |||||||||||||||||||
Merchandise | 284,313 | 250,028 | (34,285 | ) | 413,448 | 386,595 | (26,853 | ) | ||||||||||||||||
Supplies | 35,169 | 30,538 | (4,631 | ) | 27,008 | 25,547 | (1,461 | ) | ||||||||||||||||
Other | 18,538 | 18,538 | — | 12,699 | 12,699 | — | ||||||||||||||||||
338,020 | 299,104 | (38,916 | ) | 453,155 | 424,841 | (28,314 | ) | |||||||||||||||||
5. | LOANS |
a. | Loans |
2007 | 2008 | |||||||
Factoring receivables | 5,459 | 9,074 | ||||||
Allowance for doubtful accounts | (27 | ) | (63 | ) | ||||
Loans | 173,840 | 256,010 | ||||||
Deferred incidental expense (revenue) of loans | (95 | ) | (88 | ) | ||||
Allowance for doubtful accounts | (1,157 | ) | (2,773 | ) | ||||
Accounts receivable-loans | 315 | 994 | ||||||
Allowance for doubtful accounts | (2 | ) | (12 | ) | ||||
Loans for installment credit | 37,408 | 29,891 | ||||||
Deferred incidental expense (revenue) of loans | (10 | ) | (10 | ) | ||||
Allowance for doubtful accounts | (1,472 | ) | (1,285 | ) | ||||
Accounts receivable-loans for installment credit | 1,915 | 1,155 | ||||||
Allowance for doubtful accounts | (229 | ) | (9 | ) | ||||
Total — loans | 218,832 | 297,026 | ||||||
Total — allowance for doubtful accounts | (2,887 | ) | (4,142 | ) | ||||
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Table of Contents
b. | Long-term loans |
2007 | 2008 | |||||||
Factoring receivables | 6,463 | 2,770 | ||||||
Allowance for doubtful accounts | (32 | ) | (19 | ) | ||||
Loans | 89,818 | 207,647 | ||||||
Deferred incidental expense (revenue) of loans | (543 | ) | (2,876 | ) | ||||
Allowance for doubtful accounts | (592 | ) | (4,760 | ) | ||||
Loans for installment credit | 50,489 | 49,936 | ||||||
Deferred incidental expense (revenue) of loans | 768 | 334 | ||||||
Allowance for doubtful accounts | (2,199 | ) | (2,493 | ) | ||||
New technology financial investment assets | 2,000 | 1,000 | ||||||
Allowance for doubtful accounts | (205 | ) | (400 | ) | ||||
New technology financial loans | — | 2,368 | ||||||
Allowance for doubtful accounts | — | (62 | ) | |||||
Total — long-term loans | 148,995 | 261,179 | ||||||
Total — allowance for doubtful accounts | (3,028 | ) | (7,734 | ) | ||||
6. | SECURITIES |
a. | Short-term Investment assets |
2007 | 2008 | |||||||
Short-term financial instruments | 305,540 | 243,649 | ||||||
Short-term loans | 104,057 | 43,456 | ||||||
Beneficiary certificates | 46,085 | 39,696 | ||||||
Available-for-sale securities (Equity securities) | 3,064 | 82,071 | ||||||
Available-for-sale securities (Debt securities) | 1,419 | 2,171 | ||||||
Held-to-maturity securities | 5 | 6,095 | ||||||
Total | 460,170 | 417,138 | ||||||
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Table of Contents
b. | Available-for-sale Securities |
2007 | ||||||||||||||||||||
Percentage of | Acquisition | Fair Value or | Book | Unrealized Gains | ||||||||||||||||
Ownership (%) | Cost | Net Book Value | Value | (Losses) (Note 1) | ||||||||||||||||
Current assets: | ||||||||||||||||||||
Beneficiary certificates | 563 | 973 | 973 | 410 | ||||||||||||||||
Infravalley, Inc. | 3.8 | % | 200 | 2,091 | 2,091 | 1,891 | ||||||||||||||
Sub total | 763 | 3,064 | 3,064 | 2,301 | ||||||||||||||||
Non-current assets: | ||||||||||||||||||||
Krtnet Corp. | 7.4 | % | 1,954 | 4,122 | 4,122 | 2,168 | ||||||||||||||
GaeaSoft Corp. | 2.0 | % | 533 | 756 | 756 | 223 | ||||||||||||||
Zakang Inc. | 0.0 | % | 300 | 5 | 5 | (295 | ) | |||||||||||||
Geotel Corp. | 7.8 | % | 1,143 | 4,322 | 4,322 | 3,179 | ||||||||||||||
PT.Mobile-8 | 2.3 | % | 10,069 | 10,508 | 10,508 | 439 | ||||||||||||||
Solid Technologies, Inc. | 4.7 | % | 590 | 4,120 | 4,120 | 3,530 | ||||||||||||||
EST Soft Corp. | 14.2 | % | 1,650 | 5,062 | 5,062 | 3,412 | ||||||||||||||
Ongamenet Co., Ltd. | 11.4 | % | 1,061 | 4,831 | 4,831 | 3,645 | ||||||||||||||
Cape Industries Ltd. | 0.1 | % | 125 | 226 | 226 | 101 | ||||||||||||||
Bixolon Co., Ltd. | 0.0 | % | 11 | 9 | 9 | (2 | ) | |||||||||||||
Sesil Corporation | 0.4 | % | 199 | 225 | 225 | 26 | ||||||||||||||
Zmos Technology, Inc. (Note 2) | 8.6 | % | 1,872 | 506 | 1,872 | — | ||||||||||||||
Shinhan Venture Capital Co., Ltd. (Note 2) | 0.0 | % | 1,800 | 900 | 900 | — | ||||||||||||||
Korea Information Certificate Authority, Inc. (Note 2) | 9.3 | % | 2,000 | 1,891 | 2,000 | — | ||||||||||||||
KM Credit Information Inc. (Note 2) | 6.4 | % | 1,202 | — | — | — | ||||||||||||||
Korea Software Financial Cooperative (“KSFC”) (Note 2) | 1.1 | % | 1,160 | 1,315 | 1,160 | — | ||||||||||||||
Digitalinside Co., Ltd. (Note 2) | 10.2 | % | 499 | 766 | 499 | — | ||||||||||||||
Vacom, Wireless Inc. (Note 2) | 16.8 | % | 1,880 | 1,122 | 641 | — | ||||||||||||||
CXP, Inc. (Note 2) | 12.1 | % | 1,200 | 8 | 50 | — | ||||||||||||||
CEC Mobile (Note 2) | 16.7 | % | 4,456 | — | — | — | ||||||||||||||
Korea Smart Card Co., Ltd. (Note 2) | 0.7 | % | 326 | 90 | 24 | — | ||||||||||||||
Metrix Corporation Inc. (Note 2) | 2.0 | % | 200 | 25 | 14 | — | ||||||||||||||
Wiz Communication Co., Ltd. (Note 2) | 18.4 | % | 490 | 823 | 490 | — | ||||||||||||||
MIC2001-4TG Venture (Note 2) | 5.0 | % | 350 | 350 | 350 | — | ||||||||||||||
Korea Telecommunications Operators Association (“KTOA”) (Note 2) | 9.9 | % | 689 | 689 | 689 | — | ||||||||||||||
Prime Venture Capital Corp. (Note 2) | 2.7 | % | 1,000 | 194 | — | — | ||||||||||||||
DirectMedia Co., Ltd. (Note 2) | 12.5 | % | 435 | 309 | 248 | — | ||||||||||||||
Ncerti Co., Ltd. (Note 2) | 19.9 | % | 328 | 407 | 328 | — |
F-34
Table of Contents
2007 | ||||||||||||||||||||
Percentage of | Acquisition | Fair Value or | Book | Unrealized Gains | ||||||||||||||||
Ownership (%) | Cost | Net Book Value | Value | (Losses) (Note 1) | ||||||||||||||||
ICO Global Communication Ltd. (Note 2) | 0.2 | % | 617 | — | — | — | ||||||||||||||
Softbank Korea Co., Ltd. (Note 2) | 6.7 | % | 1,406 | 959 | 959 | — | ||||||||||||||
Binext CT Financial Cooperative (Note 2) | 15.0 | % | 1,500 | 1,454 | 1,500 | — | ||||||||||||||
Entaz Co., Ltd. (Note 2) | 10.1 | % | 1,000 | 828 | 1,000 | — | ||||||||||||||
Luxpia Co., Ltd. (Note 2) | 6.0 | % | 1,000 | 1,000 | 1,000 | — | ||||||||||||||
Paramount Music Co., Ltd. (Note 2) | 48.9 | % | 1,000 | 368 | 1,000 | — | ||||||||||||||
Neighbor Systems Co., Ltd. (Note 2) | 10.4 | % | 525 | 451 | 525 | — | ||||||||||||||
Digital Multimedia Interactive Co., Ltd. (Note 2) | 8.0 | % | 495 | 229 | 495 | — | ||||||||||||||
Beneficiary certificates | 14,730 | 14,325 | 14,325 | (405 | ) | |||||||||||||||
Others (Note 2) | 30,743 | 13,524 | 15,299 | — | ||||||||||||||||
Sub total | 90,538 | 76,719 | 79,554 | 16,021 | ||||||||||||||||
Total | 91,301 | 79,783 | 82,618 | 18,322 | ||||||||||||||||
2008 | ||||||||||||||||||||
Percentage of | Acquisition | Fair Value or | Book | Unrealized Gains | ||||||||||||||||
Ownership (%) | Cost | Net Book Value | Value | (Losses) (Note 1) | ||||||||||||||||
Current assets: | ||||||||||||||||||||
Beneficiary certificates | 82,000 | 82,071 | 82,071 | 71 | ||||||||||||||||
Non-current assets: | ||||||||||||||||||||
Krtnet Corp. | 7.4 | % | 1,954 | 1,832 | 1,832 | (122 | ) | |||||||||||||
GaeaSoft Corp. | 2.0 | % | 533 | 282 | 282 | (251 | ) | |||||||||||||
Zakang Inc. | 0.0 | % | 300 | 1 | 1 | (299 | ) | |||||||||||||
PT.Mobile-8 | 2.3 | % | 10,069 | 2,322 | 2,322 | (7,747 | ) | |||||||||||||
Solid Technologies, Inc. | 4.7 | % | 590 | 1,602 | 1,602 | 1,012 | ||||||||||||||
EST Soft Corp. | 14.2 | % | 1,650 | 4,435 | 4,435 | 2,785 | ||||||||||||||
Ongamenet Co., Ltd. | 11.4 | % | 1,186 | 4,474 | 4,474 | 3,288 | ||||||||||||||
Bixolon Co., Ltd. | 0.0 | % | 11 | 7 | 7 | (4 | ) | |||||||||||||
Sesil Corporation. | 0.2 | % | 199 | 137 | 137 | (62 | ) | |||||||||||||
Dalsvyaz Primorye | 0.3 | % | 688 | 3 | 3 | (685 | ) | |||||||||||||
Zmos Technology, Inc. (Note 2) | 9.9 | % | 1,872 | — | — | — | ||||||||||||||
Shinhan Venture Capital Co., Ltd. (Note 2) | 0.0 | % | 1,800 | 900 | 900 | — | ||||||||||||||
Korea Information Certificate Authority, Inc. (Note 2) | 9.3 | % | 2,000 | 2,242 | 2,000 | — | ||||||||||||||
KM Credit Information Inc. (Note 2) | 2.1 | % | 1,202 | — | — | — | ||||||||||||||
Korea Software Financial Cooperative (“KSFC”) (Note 2) | 0.9 | % | 1,000 | 1,229 | 1,000 | — |
F-35
Table of Contents
2008 | ||||||||||||||||||||
Percentage of | Acquisition | Fair Value or | Book | Unrealized Gains | ||||||||||||||||
Ownership (%) | Cost | Net Book Value | Value | (Losses) (Note 1) | ||||||||||||||||
Digitalinside Co., Ltd. (Note 2) | 7.2 | % | 499 | — | — | — | ||||||||||||||
Vacom, Wireless Inc. (Note 2) | 16.8 | % | 1,880 | 1,516 | 641 | — | ||||||||||||||
CXP, Inc. (Note 2) | 12.1 | % | 1,200 | 1 | 50 | — | ||||||||||||||
CEC Mobile (Note 2) | 16.7 | % | 4,456 | — | — | — | ||||||||||||||
Wiz Communication Co., Ltd. (Note 2) | 7.5 | % | 200 | 609 | 200 | — | ||||||||||||||
Korea Telecommunications Operators Association (“KTOA”) (Note 2) | 0.0 | % | 689 | 689 | 689 | — | ||||||||||||||
Prime Venture Capital Corp. (Note 2) | 2.7 | % | 1,000 | 186 | — | — | ||||||||||||||
ICO Global Communication Ltd. (Note 2) | 0.2 | % | 617 | — | — | — | ||||||||||||||
Softbank Korea Co., Ltd. (Note 2) | 6.7 | % | 1,406 | 959 | 959 | — | ||||||||||||||
Binext CT Financial Cooperative (Note 2) | 15.0 | % | 1,500 | 1,409 | 1,500 | — | ||||||||||||||
Entaz Co., Ltd. (Note 2) | 8.7 | % | 1,000 | 919 | 1,000 | — | ||||||||||||||
Luxpia Co., Ltd. (Note 2) | 6.0 | % | 1,000 | 1,000 | 1,000 | — | ||||||||||||||
Neighbor Systems Co., Ltd. (Note 2) | 10.4 | % | 525 | 453 | 525 | — | ||||||||||||||
Beneficiary certificates | 12,431 | 11,815 | 11,815 | (616 | ) | |||||||||||||||
Others (Note 2) | 50,097 | 28,267 | 32,543 | — | ||||||||||||||||
Sub total | 103,554 | 67,289 | 69,917 | (2,701 | ) | |||||||||||||||
Total | 185,554 | 149,360 | 151,988 | (2,630 | ) | |||||||||||||||
(Note 1) | The amounts are before adjustments for the tax effects and minority interests in consolidated subsidiaries. | |
(Note 2) | Investments in equity securities above, which are recorded at book value of |
F-36
Table of Contents
2007 | ||||||||||||||||
Amortized | Fair | Unrealized Gains | ||||||||||||||
Maturity | Cost | Value | (Losses) (Note) | |||||||||||||
Current assets: | ||||||||||||||||
Government and public bonds | National and local governments | 2008 | 929 | 929 | — | |||||||||||
Convertible bonds | DreamWiz Inc. | 2008 | 490 | 490 | — | |||||||||||
Sub total | 1,419 | 1,419 | — | |||||||||||||
Non-current assets: | ||||||||||||||||
Government and public bonds | National and local governments | 2009~2013 | 208 | 208 | — | |||||||||||
Convertible bonds | Borazon Co., Ltd. | 2009 | 600 | 600 | — | |||||||||||
Neurons lnc. | 2009 | 650 | 650 | — | ||||||||||||
ImageClick Corporation. | 2009 | 400 | 400 | — | ||||||||||||
Bonds with warrant | Nexscien Co., Ltd. | 2010 | 1,940 | 1,940 | — | |||||||||||
Sub total | 3,798 | 3,798 | — | |||||||||||||
Total | 5,217 | 5,217 | — | |||||||||||||
2008 | ||||||||||||||||
Amortized | Fair | Unrealized Gains | ||||||||||||||
Maturity | Cost | Value | (Losses) (Note) | |||||||||||||
Current assets: | ||||||||||||||||
Government and public bonds | National and local governments | 2009 | 121 | 121 | — | |||||||||||
Financial bonds of small and medium enterprise | Industrial Bank of Korea | 2009 | 1,000 | 1,000 | — | |||||||||||
Convertible bonds | Neurons, lnc. | 2009 | 650 | 650 | — | |||||||||||
ImageClick Corporation. | 2009 | 400 | 400 | — | ||||||||||||
Sub total | 2,171 | 2,171 | — | |||||||||||||
Non-current assets: | ||||||||||||||||
Government and public bonds | National and local governments | 2010~2019 | 115 | 115 | — | |||||||||||
Convertible bonds | Inno GDN, Inc. | 2011 | 2,800 | 2,800 | — | |||||||||||
Foosung Co., Ltd. | 2011 | 2,000 | 1,820 | (180 | ) | |||||||||||
Bonds with warrant | Samyoung connect Co., Ltd. | 2010 | 92 | 92 | — | |||||||||||
Sub total | 5,007 | 4,827 | (180 | ) | ||||||||||||
Total | 7,178 | 6,998 | (180 | ) | ||||||||||||
(Note) | The amounts are before adjustments for the tax effects and minority interests in consolidated subsidiaries. |
F-37
Table of Contents
2007 | 2008 | |||||||||||||||
Equity | Debt | Equity | Debt | |||||||||||||
Securities | Securities | Securities | Securities | |||||||||||||
Balance at beginning of the year | 15,449 | 519 | 18,322 | — | ||||||||||||
Realized losses (gains) on disposal of securities, net | (1,074 | ) | (519 | ) | (5,587 | ) | — | |||||||||
Changes in unrealized gains (losses), net | 3,947 | — | (15,365 | ) | (180 | ) | ||||||||||
Balance at end of the year | 18,322 | — | (2,630 | ) | (180 | ) | ||||||||||
d. | Held-to-maturity Securities |
2007 | ||||||||||||
Amortized | ||||||||||||
Maturity | Cost | Book Value | ||||||||||
Current assets: | ||||||||||||
Government and public bonds | National and local governments | 2008 | 5 | 5 | ||||||||
Sub total | 5 | 5 | ||||||||||
Non-current assets: | ||||||||||||
Government and public bonds | National and local governments | 2009~2012 | 84 | 84 | ||||||||
Subordinated bonds | Shinhan Bank | 2009 | 100 | 100 | ||||||||
Asset backed securities | DCIF 1 Co., Ltd. | 2009 | 60 | 60 | ||||||||
Sub total | 244 | 244 | ||||||||||
Total | 249 | 249 | ||||||||||
2008 | ||||||||||||
Amortized | ||||||||||||
Maturity | Cost | Book Value | ||||||||||
Current assets: | ||||||||||||
Government and public bonds | National and local governments | 2009 | 9 | 9 | ||||||||
Commercial paper | IBK Capital Corporation | 2009 | 1,030 | 1,030 | ||||||||
Lotte Engineering & Construction Co., Ltd. | 2009 | 4,956 | 4,956 | |||||||||
Subordinated bonds | Shinhan Bank | 2009 | 100 | 100 | ||||||||
Sub total | 6,095 | 6,095 | ||||||||||
Non-current assets: | ||||||||||||
Government and public bonds | National and local governments | 2011 | 77 | 77 | ||||||||
New Generation Securitization | ||||||||||||
Asset backed securities | Specialty Co., Ltd. | 2010~2014 | 8,000 | 8,000 | ||||||||
Sub total | 8,077 | 8,077 | ||||||||||
Total | 14,172 | 14,172 | ||||||||||
F-38
Table of Contents
7. | EQUITY METHOD INVESTMENT SECURITIES |
a. | Details of Equity Method Investment Securities |
2007 | ||||||||||||||||||||||||
Percentage of | ||||||||||||||||||||||||
Number of | Ownership | Acquisition | Equity in Net | Book | Market | |||||||||||||||||||
Shares | (%) | Cost | Asset Value | Value | Value | |||||||||||||||||||
Korea Telephone Directory Co., Ltd. (“KTD”) | 1,360,000 | 34.0 | % | 6,800 | 8,085 | 8,085 | — | |||||||||||||||||
Korea Information Technology Fund | 100 | 33.3 | % | 100,000 | 110,826 | 110,826 | — | |||||||||||||||||
KBSi Co., Ltd. | 952,000 | 32.4 | % | 4,760 | 3,408 | 3,408 | — | |||||||||||||||||
eNtoB Corp. | 880,000 | 27.5 | % | 5,000 | 6,725 | 7,039 | — | |||||||||||||||||
Korea Digital Satellite Broadcasting Co., Ltd. (“KDB”) | 22,706,000 | 23.0 | % | 195,976 | 3,036 | 24,892 | — | |||||||||||||||||
Sky Life Contents Fund | 45 | 22.5 | % | 4,500 | 4,997 | 4,997 | — | |||||||||||||||||
Kiwoom Investment Co. Ltd. (formerly, “Korea IT Venture Partners Inc”) | 1,800,000 | 20.2 | % | 9,000 | 7,147 | 7,147 | — | |||||||||||||||||
Goodmorning F Co., Ltd. (Note 3) | 114,000 | 19.0 | % | 254 | 1,151 | 1,151 | — | |||||||||||||||||
CURD (formerly, “Korea New Realty Development and Construction Co., Ltd.”) (Note 3) | 266,000 | 19.0 | % | 506 | 3,788 | 3,788 | — | |||||||||||||||||
Korea Information Data Corp. (“KID”) (Note 3) | 760,000 | 19.0 | % | 3,800 | 13,541 | 13,541 | — | |||||||||||||||||
Korea Information Service Corp. (“KIS”) (Note 3) | 570,000 | 19.0 | % | 2,850 | 10,792 | 10,792 | — | |||||||||||||||||
Korea Seoul Contact all Co., Ltd. (Note 3) | 45,600 | 19.0 | % | 228 | 271 | 271 | — | |||||||||||||||||
Korea Service and Communication Co., Ltd. (Note 3) | 45,600 | 19.0 | % | 228 | 274 | 274 | — | |||||||||||||||||
Korea Call Center Co., Ltd. (Note 3) | 45,600 | 19.0 | % | 228 | 266 | 266 | — | |||||||||||||||||
TMWorld Co., Ltd. (Note 3) | 45,600 | 19.0 | % | 228 | 294 | 294 | — | |||||||||||||||||
Ubiquitous Marketing Service and Communication Co., Ltd. (“UMS&C”) (Note 3) | 45,600 | 19.0 | % | 228 | 275 | 275 | — | |||||||||||||||||
Exdell Corporation (Note 3) | 38,000 | 19.0 | % | 190 | 177 | 177 | — | |||||||||||||||||
Information Technology Service Bukbu Corporation (Note 3) | 38,000 | 19.0 | % | 190 | 190 | 190 | — | |||||||||||||||||
Information Technology Solution Nambu Corporation (Note 3) | 38,000 | 19.0 | % | 190 | 190 | 190 | — | |||||||||||||||||
Information Technology Solution Seobu Corporation (Note 3) | 38,000 | 19.0 | % | 190 | 190 | 190 | — | |||||||||||||||||
Information Technology Solution Busan Corporation (Note 3) | 38,000 | 19.0 | % | 190 | 190 | 190 | — |
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2007 | ||||||||||||||||||||||||
Percentage of | ||||||||||||||||||||||||
Number of | Ownership | Acquisition | Equity in Net | Book | Market | |||||||||||||||||||
Shares | (%) | Cost | Asset Value | Value | Value | |||||||||||||||||||
Information Technology Solution Jungbu Corporation (Note 3) | 38,000 | 19.0 | % | 190 | 190 | 190 | — | |||||||||||||||||
Information Technology Solution Honam Corporation (Note 3) | 38,000 | 19.0 | % | 190 | 190 | 190 | — | |||||||||||||||||
Information Technology Solution Daegu Corporation (Note 3) | 38,000 | 19.0 | % | 190 | 190 | 190 | — | |||||||||||||||||
MOS facilities Co., Ltd. (formerly, “Mostech Co., Ltd.”) (Note 3) | 200,000 | 17.9 | % | 5,000 | 316 | 3,016 | — | |||||||||||||||||
Korea Telecom Philippines, Inc. (“KTPI”) | 744,476 | 100.0 | % | 2,481 | — | — | — | |||||||||||||||||
Mongolian Telecommunications (“MTC”) | 10,348,111 | 40.0 | % | 3,450 | 10,020 | 10,020 | 41,491 | |||||||||||||||||
KTF-CJ Music Contents Investment Fund (formerly, “Centurion Music 1”) (Note 4) | 50 | 50.0 | % | 5,000 | 5,011 | 5,011 | — | |||||||||||||||||
KTF-DoCoMo Mobile Investment Fund | 45 | 45.0 | % | 4,500 | 4,491 | 4,491 | — | |||||||||||||||||
Boston Film Fund (Note 4) | 800 | 39.0 | % | 8,000 | 7,149 | 7,149 | — | |||||||||||||||||
Harex InfoTech Inc. | 225,000 | 21.2 | % | 3,375 | 417 | 1,183 | — | |||||||||||||||||
Olive Nine Entertainment Co., Ltd. (Note 5) | 140,000 | 67.7 | % | 4,200 | (629 | ) | 659 | — | ||||||||||||||||
The Contents Entertainment (Note 5) | 30,500 | 50.8 | % | 1,754 | 158 | 1,578 | — | |||||||||||||||||
Olive Nine Creative Co., Ltd. | 40,000 | 42.9 | % | 200 | 218 | 218 | — | |||||||||||||||||
Tourtainment Inc. | 15,000 | 24.6 | % | 150 | 34 | 34 | — | |||||||||||||||||
Music City China Co., Ltd (Note 5) | — | 100.0 | % | 144 | — | — | — | |||||||||||||||||
Doremi Music Publishing Co., Ltd (Note 5) | 10,000 | 100.0 | % | 200 | 237 | 217 | — | |||||||||||||||||
Bluecord Corp. (Note 5) | 3,000,000 | 100.0 | % | 2,778 | 1,684 | 1,611 | — | |||||||||||||||||
Parangoyangi (Note 5) | 4,000,000 | 100.0 | % | 2,900 | 58 | 58 | — | |||||||||||||||||
Music City Media Co., Ltd. (Note 5) | 208,000 | 94.6 | % | 1,040 | (527 | ) | — | — | ||||||||||||||||
Dooristar Co., Ltd. | 980,000 | 49.0 | % | 1,500 | 230 | 112 | — | |||||||||||||||||
Oscar ent. Co., Ltd. | 7,865 | 49.0 | % | 650 | 417 | 417 | — | |||||||||||||||||
Netcom | 156 | 26.5 | % | 90 | 90 | 90 | — | |||||||||||||||||
TPS (Note 5) | — | 100.0 | % | 164 | 164 | 164 | — | |||||||||||||||||
ETN (Note 5) | — | 100.0 | % | 1 | 1 | 1 | — | |||||||||||||||||
Total | 383,683 | 205,922 | 234,582 | |||||||||||||||||||||
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2008 | ||||||||||||||||||||||||
Percentage of | ||||||||||||||||||||||||
Number of | Ownership | Acquisition | Equity in net | Book | Market | |||||||||||||||||||
Shares | (%) | Cost | Asset Value | Value | Value | |||||||||||||||||||
Company K Movie Asset Fund No. 1 (Notes 1 and 4) | 90 | 60.0 | % | 9,000 | 8,803 | 8,803 | — | |||||||||||||||||
KT-Global New Media Fund (Note 1) | 600 | 50.0 | % | 6,000 | 5,817 | 5,817 | — | |||||||||||||||||
Korea Telephone Directory Co., Ltd. (“KTD”) | 1,360,000 | 34.0 | % | 6,800 | 8,358 | 8,358 | — | |||||||||||||||||
Metropol Property LLC (Note 1) | — | 34.0 | % | 1,739 | 434 | 1,776 | — | |||||||||||||||||
Korea Information Technology Fund | 100 | 33.3 | % | 100,000 | 110,909 | 110,909 | — | |||||||||||||||||
KBSi Co., Ltd. | 952,000 | 32.4 | % | 4,760 | 4,679 | 4,679 | — | |||||||||||||||||
eNtoB Corp. (Note 2) | 970,000 | 30.3 | % | 6,050 | 8,187 | 8,740 | — | |||||||||||||||||
Korea Digital Satellite Broadcasting Co., Ltd. (“KDB”) | 22,706,000 | 23.3 | % | 195,976 | 22,000 | 32,928 | — | |||||||||||||||||
Sky Life Contents Fund | 45 | 22.5 | % | 4,500 | 3,737 | 3,737 | — | |||||||||||||||||
Everyshow (Note 1) | 300,000 | 21.3 | % | 1,500 | 1,226 | 1,226 | — | |||||||||||||||||
Kiwoom Investment Co., Ltd.(formerly, “Korea IT Venture Partners Inc.”) | 1,800,000 | 20.2 | % | 9,000 | 6,953 | 6,953 | — | |||||||||||||||||
Goodmorning F Co., Ltd. (Note 3) | 114,000 | 19.0 | % | 254 | 1,460 | 1,460 | — | |||||||||||||||||
CURD (formerly, “Korea New Realty Development and Construction Co., Ltd.”) (Note 3) | 266,000 | 19.0 | % | 506 | 8,369 | 8,369 | — | |||||||||||||||||
Korea Information Data Corp. (“KID”) (Note 3) | 760,000 | 19.0 | % | 3,800 | 13,666 | 13,666 | — | |||||||||||||||||
Korea Information Service Corp. (“KIS”) (Note 3) | 570,000 | 19.0 | % | 2,850 | 12,812 | 12,812 | — | |||||||||||||||||
Korea Seoul Contact all Co., Ltd. (Note 3) | 45,600 | 19.0 | % | 228 | 327 | 327 | — | |||||||||||||||||
Korea Service and Communication Co., Ltd. (Note 3) | 45,600 | 19.0 | % | 228 | 341 | 341 | — | |||||||||||||||||
Korea Call Center Co., Ltd. (Note 3) | 45,600 | 19.0 | % | 228 | 332 | 332 | — | |||||||||||||||||
TMWorld Co., Ltd. (Note 3) | 45,600 | 19.0 | % | 228 | 320 | 320 | — | |||||||||||||||||
Ubiquitous Marketing Service and Communication Co., Ltd. (“UMS&C”) (Note 3) | 45,600 | 19.0 | % | 228 | 293 | 293 | — | |||||||||||||||||
Exdell Corporation (Note 3) | 38,000 | 19.0 | % | 190 | 218 | 218 | — | |||||||||||||||||
Information Technology Service Bukbu Corporation (Note 3) | 38,000 | 19.0 | % | 190 | 225 | 225 | — | |||||||||||||||||
Information Technology Solution Nambu Corporation (Note 3) | 38,000 | 19.0 | % | 190 | 221 | 221 | — | |||||||||||||||||
Information Technology Solution Seobu Corporation (Note 3) | 38,000 | 19.0 | % | 190 | 222 | 222 | — | |||||||||||||||||
Information Technology Solution Busan Corporation (Note 3) | 38,000 | 19.0 | % | 190 | 246 | 246 | — | |||||||||||||||||
Information Technology Solution Jungbu Corporation (Note 3) | 38,000 | 19.0 | % | 190 | 295 | 295 | — |
F-41
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2008 | ||||||||||||||||||||||||
Percentage of | ||||||||||||||||||||||||
Number of | Ownership | Acquisition | Equity in net | Book | Market | |||||||||||||||||||
Shares | (%) | Cost | Asset Value | Value | Value | |||||||||||||||||||
Information Technology Solution Honam Corporation (Note 3) | 38,000 | 19.0 | % | 190 | 248 | 248 | — | |||||||||||||||||
Information Technology Solution Daegu Corporation (Note 3) | 38,000 | 19.0 | % | 190 | 218 | 218 | — | |||||||||||||||||
MOS facilities Co., Ltd. (formerly, “Mostech Co., Ltd.”) (Note 3) | 200,000 | 17.9 | % | 5,000 | 41 | 41 | — | |||||||||||||||||
Wooridul Entertainment Investment Fund-1 (Note 1) | 1,600 | 20.0 | % | 1,600 | 1,529 | 1,529 | — | |||||||||||||||||
Mongolian Telecommunications (“MTC”) | 10,348,111 | 40.0 | % | 3,450 | 13,289 | 13,289 | 12,806 | |||||||||||||||||
KTC Media Contents Investment Fund No. 1 (Notes 1 and 5) | 45 | 81.8 | % | 4,500 | 4,510 | 4,510 | — | |||||||||||||||||
KTF-CJ Music Contents Investment Fund (formerly, “Centurion Music 1”) (Note 4) | 50 | 50.0 | % | 5,000 | 5,038 | 5,038 | — | |||||||||||||||||
KTF-DoCoMo Mobile Investment Fund | 45 | 45.0 | % | 4,500 | 4,439 | 4,439 | — | |||||||||||||||||
Boston Film Fund (Note 4) | 800 | 39.0 | % | 8,000 | 4,281 | 4,281 | — | |||||||||||||||||
Harex InfoTech Inc. | 225,000 | 21.2 | % | 3,375 | 248 | 631 | — | |||||||||||||||||
U-Mobile (Notes 1 and 3) | 62,601,493 | 16.5 | % | 96,700 | 33,102 | 82,663 | — | |||||||||||||||||
Shinhan-KTF Mobilecard Co., Ltd. (Note 1) | 199,999 | 50.0 | % | 1,000 | 708 | 708 | — | |||||||||||||||||
Olive Nine Entertainment Co., Ltd. (Note 5) | 140,000 | 67.7 | % | 4,200 | (1,074 | ) | — | — | ||||||||||||||||
The Contents Entertainment (Note 5) | 30,500 | 50.8 | % | 1,754 | 3 | 950 | — | |||||||||||||||||
Olive Nine Creative Co., Ltd. | 40,000 | 42.9 | % | 200 | 150 | 150 | — | |||||||||||||||||
Music City China Co., Ltd. (Note 5) | — | 100.0 | % | 144 | — | — | — | |||||||||||||||||
Doremi Music Publishing Co., Ltd. (Note 5) | 10,000 | 100.0 | % | 200 | (7 | ) | — | — | ||||||||||||||||
Parangoyangi (Note 5) | 4,000,000 | 100.0 | % | 2,900 | (303 | ) | — | — | ||||||||||||||||
Music City Media Co., Ltd. (Note 5) | 208,000 | 94.6 | % | 1,040 | (688 | ) | — | — | ||||||||||||||||
Dooristar Co., Ltd. | 980,000 | 49.0 | % | 1,500 | (398 | ) | — | — | ||||||||||||||||
Oscar ent. Co., Ltd. | 7,865 | 49.0 | % | 650 | 384 | 384 | — | |||||||||||||||||
D&G Star Co., Ltd. (Note 5) | 52,000 | 70.3 | % | 260 | 190 | 190 | — | |||||||||||||||||
Paramount Music Co., Ltd. | 7,848 | 48.9 | % | 1,000 | 313 | 313 | — | |||||||||||||||||
Onestone Communication Co., Ltd. (Notes 5 and 6) | 100,000 | 100.0 | % | 1,159 | 263 | 206 | — | |||||||||||||||||
Netcom | 156 | 26.5 | % | 90 | 80 | 80 | — | |||||||||||||||||
TPS (Note 5) | — | 100.0 | % | 164 | 205 | 205 | — | |||||||||||||||||
ETN (Note 5) | — | 100.0 | % | 1 | 1 | 1 | — | |||||||||||||||||
Total | 503,782 | 287,220 | 353,347 | |||||||||||||||||||||
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(Note 1) | In 2008, the Company acquired 60.0% ownership interest of Company K Movie Asset Fund No. 1 for | |
(Note 2) | The Company’s ownership interest in eNtoB Corp. increased from 27.5% to 30.3% as of December 31, 2008 due to the additional acquisition of ownership interest. | |
(Note 3) | Although the Company’s ownership in these companies is less than 20%, the Company has significant influence over these companies through the participation in these companies’ various management decisions. As a result, the Company accounts for these investments using the equity method. | |
(Note 4) | The Company is the largest stockholder of these companies with more than 30% ownership interest. However, since the Company has no control over these companies, these investments are accounted for using the equity method. | |
(Note 5) | The unlisted company whose total assets as of December 31 of the prior year are less than | |
(Note 6) | Nasmedia is newly included in the consolidation in 2008 and its investment in Onestone Communication Co., Ltd. is accounted for using the equity method. |
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Table of Contents
b. | Changes in Carrying Amount Resulting from the Equity Method |
2007 | ||||||||||||||||||||
Equity in | Increase | |||||||||||||||||||
Income | (Decrease) in | Other | ||||||||||||||||||
January 1, | (Loss) | Equity of | Increase | December 31, | ||||||||||||||||
2007 | (Note 4) | Associates | (Decrease) | 2007 | ||||||||||||||||
KTD (Note 1) | 7,867 | 219 | (1 | ) | — | 8,085 | ||||||||||||||
Korea Information Technology Fund | 101,609 | 7,802 | 1,647 | (232 | ) | 110,826 | ||||||||||||||
KBSi Co., Ltd. | 2,810 | 598 | — | — | 3,408 | |||||||||||||||
eNtoB Corp. (Note 1) | 5,112 | 720 | 7 | 1,200 | 7,039 | |||||||||||||||
KDB (Note 1) | 16,455 | 7,676 | 761 | — | 24,892 | |||||||||||||||
Sky Life Contents Fund | 5,050 | (53 | ) | — | — | 4,997 | ||||||||||||||
Kiwoom Investment Co., Ltd. (formerly, “Korea IT Venture Partners Inc”) (Note 1) | 9,204 | (1,668 | ) | 160 | (549 | ) | 7,147 | |||||||||||||
Goodmorning F Co., Ltd. | 826 | 324 | 1 | — | 1,151 | |||||||||||||||
CURD (formerly, “KNRDC”) | 2,375 | 1,413 | — | — | 3,788 | |||||||||||||||
KID | 12,230 | 1,463 | — | (152 | ) | 13,541 | ||||||||||||||
KIS | 8,382 | 2,524 | — | (114 | ) | 10,792 | ||||||||||||||
Korea Seoul Contact all Co., Ltd. | 228 | 43 | — | — | 271 | |||||||||||||||
Korea Service and Communication Co., Ltd. | 228 | 46 | — | — | 274 | |||||||||||||||
Korea Call Center Co., Ltd. | 228 | 38 | — | — | 266 | |||||||||||||||
TMWorld Co., Ltd. | 228 | 66 | — | — | 294 | |||||||||||||||
UMS&C | 228 | 47 | — | — | 275 | |||||||||||||||
Exdell Corporation (Note 1) | — | (13 | ) | — | 190 | 177 | ||||||||||||||
Information Technology Service Bukbu Corporation (Note 1) | — | — | — | 190 | 190 | |||||||||||||||
Information Technology Solution Nambu Corporation (Note 1) | — | — | — | 190 | 190 | |||||||||||||||
Information Technology Solution Seobu Corporation (Note 1) | — | — | — | 190 | 190 | |||||||||||||||
Information Technology Solution Busan Corporation (Note 1) | — | — | — | 190 | 190 | |||||||||||||||
Information Technology Solution Jungbu Corporation (Note 1) | — | — | — | 190 | 190 | |||||||||||||||
Information Technology Solution Honam Corporation (Note 1) | — | — | — | 190 | 190 | |||||||||||||||
Information Technology Solution Daegu Corporation (Note 1) | — | — | — | 190 | 190 | |||||||||||||||
MOS facilities Co., Ltd. (“Mostech Co., Ltd.”) (Note 1) | 4,186 | (1,170 | ) | — | — | 3,016 | ||||||||||||||
Pivotec Co., Ltd. | 6,299 | 38 | (3,359 | ) | (2,978 | ) | — | |||||||||||||
MTC (Note 1) | 9,321 | 1,233 | 52 | (586 | ) | 10,020 | ||||||||||||||
KTF-CJ Music Contents Investment Fund (formerly, “Centurion Music 1”) (Note 1) | 5,025 | (14 | ) | — | — | 5,011 | ||||||||||||||
KTF-DoCoMo Mobile Investment Fund (Note 1) | — | (9 | ) | — | 4,500 | 4,491 | ||||||||||||||
Boston Film Fund (Note 1) | 8,014 | (865 | ) | — | — | 7,149 | ||||||||||||||
Harex InfoTech Inc. | 1,902 | (719 | ) | — | — | 1,183 | ||||||||||||||
Olive Nine Entertainment Co., Ltd. | 833 | (1,071 | ) | — | 897 | 659 | ||||||||||||||
The Contents Entertainment | 2,133 | (555 | ) | — | — | 1,578 | ||||||||||||||
Olive Nine Creative Co., Ltd. | 249 | (31 | ) | — | — | 218 | ||||||||||||||
Tourtainment, Inc. | 134 | (100 | ) | — | — | 34 | ||||||||||||||
Music City China Co., Ltd. (Notes 1 and 3) | — | — | — | — | — | |||||||||||||||
Doremi Music Publishing Co., Ltd. (Note 1) | — | — | — | 217 | 217 | |||||||||||||||
Bluecord Corp. (Note 1) | — | — | — | 1,611 | 1,611 | |||||||||||||||
Parangoyangi (Note 1) | — | — | — | 58 | 58 | |||||||||||||||
Music City Media Co,, Ltd. (Notes 1 and 3) | — | — | — | — | — | |||||||||||||||
Dooristar Co., Ltd. (Note 1) | — | — | — | 112 | 112 | |||||||||||||||
Oscar Ent. Co., Ltd. (Note 1) | — | — | — | 417 | 417 | |||||||||||||||
Netcom | — | — | — | 90 | 90 | |||||||||||||||
TPS | — | — | — | 164 | 164 | |||||||||||||||
ETN | — | — | — | 1 | 1 | |||||||||||||||
Total | 211,156 | 17,982 | (732 | ) | 6,176 | 234,582 | ||||||||||||||
F-44
Table of Contents
2008 | ||||||||||||||||||||
Equity in | Increase | |||||||||||||||||||
Income | (Decrease) in | Other | ||||||||||||||||||
January 1, | (Loss) | Equity of | Increase | December 31, | ||||||||||||||||
2008 | (Note 4) | Associates | (Decrease) | 2008 | ||||||||||||||||
Company K Movie Asset Fund No. 1 | — | (197 | ) | — | 9,000 | 8,803 | ||||||||||||||
KT-Global New Media Fund (Note 1) | — | (183 | ) | — | 6,000 | 5,817 | ||||||||||||||
KTD (Note 1) | 8,085 | 273 | — | — | 8,358 | |||||||||||||||
Metropol Property LLC (Note 1) | — | (12 | ) | 49 | 1,739 | 1,776 | ||||||||||||||
Korea Information Technology Fund | 110,826 | 2,506 | (1,696 | ) | (727 | ) | 110,909 | |||||||||||||
KBSi Co., Ltd. | 3,408 | 1,271 | — | — | 4,679 | |||||||||||||||
eNtoB Corp. (Note 1) | 7,039 | 655 | (4 | ) | 1,050 | 8,740 | ||||||||||||||
KDB (Note 1) | 24,892 | 1,527 | 6,183 | 326 | 32,928 | |||||||||||||||
Sky Life Contents Fund | 4,997 | (1,260 | ) | — | — | 3,737 | ||||||||||||||
Everyshow | — | (274 | ) | — | 1,500 | 1,226 | ||||||||||||||
Kiwoom Investment Co., Ltd. (formerly, “Korea IT Venture Partners Inc.”)(Note 1) | 7,147 | 64 | (258 | ) | — | 6,953 | ||||||||||||||
Goodmorning F Co., Ltd. | 1,151 | 314 | (5 | ) | — | 1,460 | ||||||||||||||
CURD (formerly, “KNRDC”) | 3,788 | 4,631 | (50 | ) | — | 8,369 | ||||||||||||||
KID | 13,541 | 353 | — | (228 | ) | 13,666 | ||||||||||||||
KIS (Note 1) | 10,792 | 2,191 | — | (171 | ) | 12,812 | ||||||||||||||
Korea Seoul Contact all Co., Ltd. | 271 | 56 | — | — | 327 | |||||||||||||||
Korea Service and Communication Co., Ltd. | 274 | 67 | — | — | 341 | |||||||||||||||
Korea Call Center Co., Ltd. | 266 | 66 | — | — | 332 | |||||||||||||||
TMWorld Co., Ltd. | 294 | 26 | — | — | 320 | |||||||||||||||
UMS&C | 275 | 18 | — | — | 293 | |||||||||||||||
Exdell Corporation (Note 1) | 177 | 41 | — | — | 218 | |||||||||||||||
Information Technology Service Bukbu Corporation | 190 | 35 | — | — | 225 | |||||||||||||||
Information Technology Solution Nambu Corporation | 190 | 31 | — | — | 221 | |||||||||||||||
Information Technology Solution Seobu Corporation (Note 1) | 190 | 32 | — | — | 222 | |||||||||||||||
Information Technology Solution Busan Corporation | 190 | 56 | — | — | 246 | |||||||||||||||
Information Technology Solution Jungbu Corporation | 190 | 105 | — | — | 295 | |||||||||||||||
Information Technology Solution Honam Corporation | 190 | 58 | — | — | 248 | |||||||||||||||
Information Technology Solution Daegu Corporation | 190 | 28 | — | — | 218 | |||||||||||||||
MOS facilities Co., Ltd. (formerly, “Mostech Co., Ltd.”) (Notes 1 and 2) | 3,016 | (1,047 | ) | — | (1,928 | ) | 41 | |||||||||||||
Wooridul Entertainment Investment Fund-1 (Note 1) | — | (71 | ) | — | 1,600 | 1,529 | ||||||||||||||
MTC (Note 1) | 10,020 | 1,520 | 2,397 | (648 | ) | 13,289 | ||||||||||||||
KTC Media Contents Investment Fund No. 1 (Note 1) | — | 10 | — | 4,500 | 4,510 | |||||||||||||||
KTF-CJ Music Contents Investment Fund (formerly, “Centurion Music 1”) | 5,011 | 27 | — | — | 5,038 | |||||||||||||||
KTF-DoCoMo Mobile Investment Fund | 4,491 | (52 | ) | — | — | 4,439 | ||||||||||||||
Boston Film Fund | 7,149 | (2,868 | ) | — | — | 4,281 | ||||||||||||||
Harex InfoTech Inc. | 1,183 | (552 | ) | — | — | 631 | ||||||||||||||
U-Mobile | — | (19,699 | ) | 5,662 | 96,700 | 82,663 | ||||||||||||||
Shinhan-KTF Mobilecard Co., Ltd. | — | (292 | ) | — | 1,000 | 708 | ||||||||||||||
Olive Nine Entertainment Co., Ltd. (Note 3) | 659 | (659 | ) | — | — | — | ||||||||||||||
The Contents Entertainment | 1,578 | (628 | ) | — | — | 950 | ||||||||||||||
Olive Nine Creative Co., Ltd. | 218 | (68 | ) | — | — | 150 | ||||||||||||||
Tourtainment Inc. (Note 5) | 34 | (5 | ) | — | (29 | ) | — | |||||||||||||
Music City China Co., Ltd. (Notes 1 and 3) | — | — | — | — | — | |||||||||||||||
Doremi Music Publishing Co,, Ltd. (Notes 1 and 3) | 217 | (217 | ) | — | — | — | ||||||||||||||
Bluecord Corp. (Notes 1 and 3) | 1,611 | 109 | — | (1,720 | ) | — | ||||||||||||||
PARANGOYANGI (Notes 1 and 3) | 58 | (58 | ) | — | — | — | ||||||||||||||
Music City Media Co., Ltd. (Notes 1 and 3) | — | — | — | — | — | |||||||||||||||
Dooristar Co., Ltd. (Notes 1 and 3) | 112 | (112 | ) | — | — | — | ||||||||||||||
Oscar ent. Co., Ltd. (Note 1) | 417 | (33 | ) | — | — | 384 | ||||||||||||||
D&G Star Co., Ltd. (Notes 1 and 2) | — | (42 | ) | — | 232 | 190 | ||||||||||||||
Paramount Music Co., Ltd. (Note 2) | — | — | — | 313 | 313 | |||||||||||||||
Onestone Communication Co., Ltd. (Notes 1 and 2) | — | (25 | ) | — | 231 | 206 | ||||||||||||||
Netcom | 90 | (32 | ) | — | 22 | 80 | ||||||||||||||
TPS | 164 | — | — | 41 | 205 | |||||||||||||||
ETN | 1 | — | — | — | 1 | |||||||||||||||
Total | 234,582 | (12,316 | ) | 12,278 | 118,803 | 353,347 | ||||||||||||||
F-45
Table of Contents
(Note 1) | These securities were accounted for using the equity method based on unaudited financial statements as of and for the year ended December 31, 2008 as the audited financial statements on these companies could not be obtained by the Company’s year-end closing. In order to verify the reliability of such unaudited financial statements, the Company has performed the following procedures and found no significant exceptions: | |
i) Obtain the unaudited financial statements signed by the investee’s chief executive officer and statutory auditor. | ||
ii) Identify whether major transactions or accounting events, including those disclosed to public by the investee, which were acknowledged by the Company are properly reflected in the unaudited financial statements. | ||
iii) Identify major accounting issues under discussion between the investee and its external auditors and the investee’s plan to resolve such issues. | ||
iv) Analyze the effect of potential difference between the unaudited and audited financial statements. | ||
(Note 2) | For the year ended December 31, 2008, the Company recognized impairment loss on investment difference totaling | |
(Note 3) | The Company discontinued the equity method of accounting since the book values of the investments in Olive Nine Entertainment Co., Ltd. and other six equity method investments are below zero due to accumulated deficit. | |
(Note 4) | Equity income (loss) until the date of acquisition from the newly consolidated entities in 2008 was excluded. Meanwhile, in accordance with the SKAS No. 24 “Preparation and Presentation of Financial Statements II (Financial Industry)”, equity income amounting to | |
(Note 5) | As the Company lost significant influence on investment in equity securities of Tourtainment Inc. during the year ended December 31, 2008, such securities were transferred to available-for-sale securities. |
c. | Changes in Investment Difference |
2007 | 2008 | |||||||||||||||||||||||||||||||||||
January 1, | January 1, | Impairment | December 31, | |||||||||||||||||||||||||||||||||
Affiliate | 2007 | Increase | Amortization | Other | 2008 | Increase | Amortization | Loss | 2008 | |||||||||||||||||||||||||||
Metropol Property LLC | — | — | — | — | — | 1,491 | (149 | ) | — | 1,342 | ||||||||||||||||||||||||||
eNtoB Corp. | — | 346 | (32 | ) | — | 314 | 316 | (77 | ) | — | 553 | |||||||||||||||||||||||||
KDB | 33,413 | — | (11,557 | ) | — | 21,856 | — | (10,928 | ) | — | 10,928 | |||||||||||||||||||||||||
MOS facilities Co., Ltd. (formerly, “Mostech Co., Ltd.”) | 3,471 | — | (771 | ) | — | 2,700 | — | (772 | ) | (1,928 | ) | — | ||||||||||||||||||||||||
Harex InfoTech Inc. | 1,149 | — | (383 | ) | — | 766 | — | (383 | ) | — | 383 | |||||||||||||||||||||||||
U-Mobile | — | 58,307 | (8,746 | ) | — | 49,561 | ||||||||||||||||||||||||||||||
OliveNine Entertainment | 1,932 | — | (644 | ) | — | 1,288 | — | (644 | ) | — | 644 | |||||||||||||||||||||||||
The Contents Entertainment | 1,876 | — | (456 | ) | — | 1,420 | — | (473 | ) | — | 947 | |||||||||||||||||||||||||
Doremi Music Publishing Co., Ltd. | — | — | — | (23 | ) | (23 | ) | — | 8 | — | (15 | ) | ||||||||||||||||||||||||
D&G Star Co., Ltd. | — | — | — | — | — | 28 | — | (28 | ) | — | ||||||||||||||||||||||||||
Paramount Music Co., Ltd. | — | — | — | — | — | 687 | — | (687 | ) | — | ||||||||||||||||||||||||||
Total | 41,841 | 346 | (13,843 | ) | (23 | ) | 28,321 | 60,829 | (22,164 | ) | (2,643 | ) | 64,343 | |||||||||||||||||||||||
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Table of Contents
d. | Elimination of Unrealized Gains (Losses) |
e. | Cumulative Changes in the Company’s Equity in Net Asset Value of The Investee’s Not Recognized |
2007 | 2008 | |||||||
Olive Nine Entertainment Co., Ltd. | — | (1,074 | ) | |||||
Doremi Music Publishing Co., Ltd. | — | (7 | ) | |||||
Parangoyangi | — | (303 | ) | |||||
Music City Media Co., Ltd. | (527 | ) | (688 | ) | ||||
Dooristar Co., Ltd. | — | (398 | ) | |||||
Total | (527 | ) | (2,470 | ) | ||||
f. | Condensed Financial Information of the Investees |
2007 | ||||||||||||||||
Net | ||||||||||||||||
Total | Total | Income | ||||||||||||||
Assets | Liabilities | Revenue | (Loss) | |||||||||||||
KTD | 62,967 | 39,190 | 43,570 | 643 | ||||||||||||
Korea Information Technology Fund | 332,476 | — | 33,644 | 22,712 | ||||||||||||
KBSi Co., Ltd. | 18,429 | 7,904 | 26,227 | 1,845 | ||||||||||||
eNtoB Corp. | 64,311 | 39,728 | 563,278 | 3,014 | ||||||||||||
KDB | 513,708 | 341,515 | 387,393 | 38,199 | ||||||||||||
Sky Life Contents Fund | 22,716 | 505 | 469 | (236 | ) | |||||||||||
Kiwoom Investment Co., Ltd. (formerly, “Korea IT Venture Partners Inc”) | 35,609 | 173 | 3,979 | (7,690 | ) | |||||||||||
Goodmorning F Co., Ltd. | 16,988 | 10,927 | 56,842 | 1,707 | ||||||||||||
CURD (formerly, “KNRDC”) | 46,034 | 26,100 | 62,074 | 7,435 | ||||||||||||
KID | 99,632 | 28,363 | 194,977 | 7,862 | ||||||||||||
KIS | 82,373 | 25,571 | 143,024 | 13,409 | ||||||||||||
Korea Seoul Contact all Co., Ltd. | 4,989 | 3,565 | 37,876 | 224 | ||||||||||||
Korea Service and Communication Co., Ltd. | 4,150 | 2,708 | 31,015 | 243 | ||||||||||||
Korea Call Center Co., Ltd. | 4,070 | 2,671 | 27,523 | 199 | ||||||||||||
TMworld Co., Ltd. | 3,799 | 2,371 | 26,995 | 348 | ||||||||||||
UMS&C | 4,255 | 2,808 | 26,691 | 247 | ||||||||||||
Exdell Corporation | 1,020 | 90 | 200 | (70 | ) | |||||||||||
Information Technology Service Bukbu Corporation | 1,000 | — | — | — | ||||||||||||
Information Technology Solution Nambu Corporation | 1,000 | — | — | — | ||||||||||||
Information Technology Solution Seobu Corporation | 1,000 | — | — | — | ||||||||||||
Information Technology Solution Busan Corporation | 1,000 | — | — | — |
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2007 | ||||||||||||||||
Net | ||||||||||||||||
Total | Total | Income | ||||||||||||||
Assets | Liabilities | Revenue | (Loss) | |||||||||||||
Information Technology Solution Jungbu Corporation | 1,000 | — | — | — | ||||||||||||
Information Technology Solution Honam Corporation | 1,000 | — | — | — | ||||||||||||
Information Technology Solution Daegu Corporation | 1,000 | — | — | — | ||||||||||||
MOS facilities Co., Ltd. (formerly, “Mostech Co., Ltd.”) | 7,501 | 5,735 | 19,879 | (2,222 | ) | |||||||||||
KTPI | 208 | 112,751 | 20 | (13,481 | ) | |||||||||||
MTC | 32,149 | 7,100 | 28,229 | 3,081 | ||||||||||||
KTF-CJ Music Contents Investment Fund (formerly, “Centurion Music 1”) | 10,133 | 112 | — | 8 | ||||||||||||
KTF-DoCoMo Mobile Investment Fund | 10,083 | 104 | — | (20 | ) | |||||||||||
Boston Film Fund | 18,832 | 513 | 1,319 | (2,215 | ) | |||||||||||
Harex InfoTech Inc. | 3,544 | 1,573 | 5,626 | (1,589 | ) | |||||||||||
Olive Nine Entertainment Co., Ltd. | 770 | 1,702 | 1,284 | 630 | ||||||||||||
The Contents Entertainment | 1,275 | 964 | 3,046 | 193 | ||||||||||||
Olive Nine Creative Co., Ltd. | 675 | 165 | 2 | (70 | ) | |||||||||||
Tourtainment, Inc. | 219 | 79 | 157 | (404 | ) | |||||||||||
Doremi Music Publishing Co., Ltd. | 251 | 14 | 179 | (32 | ) | |||||||||||
Bluecord Corp. | 5,003 | 3,323 | 1,685 | (690 | ) | |||||||||||
Parangoyangi | 856 | 798 | 2,789 | (279 | ) | |||||||||||
Music City Media Co., Ltd. | 556 | 1,114 | 1,322 | 92 | ||||||||||||
Dooristar Co., Ltd. | 998 | 529 | 533 | (218 | ) | |||||||||||
Oscar ent. Co., Ltd. | 1,129 | 278 | 1,606 | 250 |
2008 | ||||||||||||||||
Net | ||||||||||||||||
Total | Total | Income | ||||||||||||||
Assets | Liabilities | Revenue | (Loss) | |||||||||||||
Company K Movie Asset Fund No. 1 | 14,671 | — | — | (329 | ) | |||||||||||
KT-Global New Media Fund | 11,654 | 19 | — | (365 | ) | |||||||||||
KTD | 62,779 | 38,198 | 44,325 | 804 | ||||||||||||
Metropol Property LLC | 1,310 | 33 | 847 | 403 | ||||||||||||
Korea Information Technology Fund | 332,724 | — | 19,742 | 7,518 | ||||||||||||
KBSi Co., Ltd. | 21,638 | 7,188 | 31,526 | 3,926 | ||||||||||||
eNtoB Corp. | 79,327 | 52,189 | 756,983 | 2,635 | ||||||||||||
KDB | 508,039 | 287,103 | 386,958 | 31,225 | ||||||||||||
Sky Life Contents Fund | 16,798 | 189 | 795 | (5,602 | ) | |||||||||||
Everyshow | 6,301 | 538 | 1,359 | (1,287 | ) | |||||||||||
Kiwoom Investment Co., Ltd.(formerly, “Korea IT Venture Partners Inc”) | 34,651 | 177 | 6,146 | 316 | ||||||||||||
Goodmorning F Co., Ltd. | 12,476 | 4,791 | 54,851 | 1,654 | ||||||||||||
CURD (formerly, “KNRDC”) | 83,655 | 39,607 | 67,241 | 24,374 | ||||||||||||
KID | 103,117 | 31,191 | 211,410 | 2,020 | ||||||||||||
KIS | 94,355 | 26,921 | 149,293 | 11,654 | ||||||||||||
Korea Seoul Contact all Co., Ltd. | 6,420 | 4,700 | 43,581 | 296 | ||||||||||||
Korea Service and Communication Co., Ltd. | 4,860 | 3,064 | 31,584 | 354 |
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2008 | ||||||||||||||||
Net | ||||||||||||||||
Total | Total | Income | ||||||||||||||
Assets | Liabilities | Revenue | (Loss) | |||||||||||||
Korea Call Center Co., Ltd. | 4,893 | 3,144 | 29,851 | 349 | ||||||||||||
TMworld Co., Ltd. | 4,487 | 2,803 | 30,386 | 257 | ||||||||||||
UMS&C | 4,737 | 3,196 | 31,121 | 94 | ||||||||||||
Exdell Corporation | 2,331 | 1,186 | 11,280 | 215 | ||||||||||||
Information Technology Service Bukbu Corporation | 4,802 | 3,619 | 11,802 | 183 | ||||||||||||
Information Technology Solution Nambu Corporation | 5,593 | 4,430 | 13,954 | 162 | ||||||||||||
Information Technology Solution Seobu Corporation | 4,782 | 3,612 | 12,430 | 170 | ||||||||||||
Information Technology Solution Busan Corporation | 5,095 | 3,799 | 11,182 | 296 | ||||||||||||
Information Technology Solution Jungbu Corporation | 5,600 | 4,045 | 12,569 | 555 | ||||||||||||
Information Technology Solution Honam Corporation | 4,872 | 3,567 | 11,907 | 305 | ||||||||||||
Information Technology Solution Daegu Corporation | 3,324 | 2,175 | 6,690 | 148 | ||||||||||||
MOS facilities Co., Ltd. (formerly, “Mostech Co., Ltd.”) | 6,892 | 6,661 | 21,135 | (1,535 | ) | |||||||||||
Wooridul Entertainment Investment Fund-1 | 7,594 | 1 | 68 | (407 | ) | |||||||||||
MTC | 40,992 | 7,769 | 28,167 | 3,799 | ||||||||||||
KTC Media Contents Investment Fund No. 1 | 5,591 | 79 | 91 | 12 | ||||||||||||
KTF-CJ Music Contents Investment Fund (formerly, “Centurion Music 1”) | 10,126 | 50 | 621 | (10 | ) | |||||||||||
KTF-DoCoMo Mobile Investment Fund | 10,378 | 515 | 416 | (116 | ) | |||||||||||
Boston Film Fund | 11,482 | 513 | 345 | (7,408 | ) | |||||||||||
Harex InfoTech Inc. | 2,252 | 1,082 | 2,798 | (801 | ) | |||||||||||
U-Mobile | 307,425 | 106,809 | 27,314 | (66,379 | ) | |||||||||||
Shinhan-KTF Mobilecard Co., Ltd. | 1,509 | 93 | 34 | (584 | ) | |||||||||||
Olive Nine Entertainment Co., Ltd. | 251 | 1,837 | 1,384 | (653 | ) | |||||||||||
The Contents Entertainment | 752 | 747 | 1,937 | (305 | ) | |||||||||||
Olive Nine Creative Co., Ltd. | 548 | 198 | 53 | (160 | ) | |||||||||||
Doremi Music Publishing Co., Ltd. | 17 | 24 | 39 | 26 | ||||||||||||
Parangoyangi | 408 | 711 | 572 | (355 | ) | |||||||||||
Music City Media Co., Ltd. | 464 | 1,089 | 639 | 19 | ||||||||||||
Dooristar Co., Ltd. | 243 | 586 | 24 | 182 | ||||||||||||
Oscar ent. Co., Ltd. | 895 | 213 | 807 | (82 | ) | |||||||||||
D&G Star Co., Ltd. | 235 | 815 | 879 | (632 | ) | |||||||||||
Onestone Communication Co., Ltd. | 397 | 133 | — | (38 | ) |
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8. | PROPERTY AND EQUIPMENT |
2007 | ||||||||||||||||||||||||||||
Acquisition Cost | ||||||||||||||||||||||||||||
(Including | ||||||||||||||||||||||||||||
January 1, | Capital | Depreciation | Impairment | Others | December 31, | |||||||||||||||||||||||
2007 | Expenditures) | Disposal | (Note 1) | Loss | (Note 2) | 2007 | ||||||||||||||||||||||
Land (Note 3) | 1,208,244 | 1,424 | (3,471 | ) | — | — | 48,982 | 1,255,179 | ||||||||||||||||||||
Buildings (Note 3) | 3,245,655 | 3,398 | (10,744 | ) | (138,362 | ) | — | 152,090 | 3,252,037 | |||||||||||||||||||
Structures | 246,597 | 122 | (1,642 | ) | (19,657 | ) | — | 20,010 | 245,430 | |||||||||||||||||||
Machinery | 9,508,929 | 65,188 | (149,797 | ) | (2,767,946 | ) | (4,931 | ) | 2,850,166 | 9,501,609 | ||||||||||||||||||
Vehicles | 13,830 | 990 | (3,581 | ) | (4,667 | ) | — | 3,255 | 9,827 | |||||||||||||||||||
Others | 551,991 | 258,167 | (23,896 | ) | (295,255 | ) | (3,059 | ) | 127,028 | 614,976 | ||||||||||||||||||
Construction- in-progress | 392,183 | 3,306,356 | (209 | ) | — | — | (3,289,386 | ) | 408,944 | |||||||||||||||||||
15,167,429 | 3,635,645 | (193,340 | ) | (3,225,887 | ) | (7,990 | ) | (87,855 | ) | 15,288,002 | ||||||||||||||||||
2008 | ||||||||||||||||||||||||||||
Acquisition Cost | ||||||||||||||||||||||||||||
(Including | ||||||||||||||||||||||||||||
January 1, | Capital | Depreciation | Impairment | Others | December 31, | |||||||||||||||||||||||
2008 | Expenditures) | Disposal | (Note 1) | Loss | (Note 2) | 2008 | ||||||||||||||||||||||
Land (Note 3) | 1,255,179 | 225 | (6,175 | ) | — | — | 40,001 | 1,289,230 | ||||||||||||||||||||
Buildings (Note 3) | 3,252,037 | 38,787 | (26,905 | ) | (146,589 | ) | — | 298,587 | 3,415,917 | |||||||||||||||||||
Structures | 245,430 | 482 | (8,188 | ) | (19,079 | ) | — | 11,031 | 229,676 | |||||||||||||||||||
Machinery | 9,501,609 | 67,543 | (83,732 | ) | (2,778,108 | ) | (20,521 | ) | 2,686,282 | 9,374,073 | ||||||||||||||||||
Vehicles | 9,827 | 33,161 | (670 | ) | (9,328 | ) | — | 1,616 | 34,606 | |||||||||||||||||||
Others | 614,976 | 134,534 | (20,592 | ) | (311,187 | ) | (155 | ) | 132,126 | 549,702 | ||||||||||||||||||
Construction- in-progress | 408,944 | 3,087,737 | (20 | ) | — | — | (3,201,234 | ) | 295,427 | |||||||||||||||||||
15,288,002 | 3,362,469 | (145,282 | ) | (3,264,291 | ) | (20,676 | ) | (31,591 | ) | 15,188,631 | ||||||||||||||||||
(Note 1) | Depreciation until the date of acquisition of the newly consolidated entities in 2007 was excluded. | |
(Note 2) | Others mainly consist of the transfers from construction-in-progress to machinery, increase in contribution for construction, increase due to changes in consolidated entities and reclassifications. | |
(Note 3) | Certain portion of lands and buildings were pledged as collateral relating to short-term and long-term borrowings and certain lease contracts. The maximum pledged amount as of December 31, 2008 was |
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9. | CONTRIBUTION FOR CONSTRUCTION |
2007 | ||||||||||||||||||||
January 1, | December 31, | |||||||||||||||||||
2007 | Increase | Decrease | Transfer | 2007 | ||||||||||||||||
Buildings | 2,732 | — | (1,337 | ) | 911 | 2,306 | ||||||||||||||
Structures | 1,402 | — | (170 | ) | 285 | 1,517 | ||||||||||||||
Machinery | 98,371 | — | (43,037 | ) | 55,977 | 111,311 | ||||||||||||||
Others | 1,490 | — | (1,038 | ) | 1,085 | 1,537 | ||||||||||||||
Construction-in-progress | 70,163 | 76,625 | — | (58,258 | ) | 88,530 | ||||||||||||||
Total | 174,158 | 76,625 | (45,582 | ) | — | 205,201 | ||||||||||||||
2008 | ||||||||||||||||||||
January 1, | December 31, | |||||||||||||||||||
2008 | Increase | Decrease | Transfer | 2008 | ||||||||||||||||
Buildings | 2,306 | — | (221 | ) | 103 | 2,188 | ||||||||||||||
Structures | 1,517 | — | (175 | ) | 165 | 1,507 | ||||||||||||||
Machinery | 111,311 | — | (45,196 | ) | 53,196 | 119,311 | ||||||||||||||
Others | 1,537 | — | (1,370 | ) | 1,619 | 1,786 | ||||||||||||||
Construction-in-progress | 88,530 | 74,228 | — | (55,083 | ) | 107,675 | ||||||||||||||
Total | 205,201 | 74,228 | (46,962 | ) | — | 232,467 | ||||||||||||||
10. | INTANGIBLE ASSETS |
2007 | ||||||||||||||||||||||||
Reversal | ||||||||||||||||||||||||
January 1, | (Amortization) | Impairment | December 31, | |||||||||||||||||||||
2007 | Increase | (Note) | Loss | Others | 2007 | |||||||||||||||||||
Goodwill | 488,650 | — | (138,405 | ) | — | 21,255 | 371,500 | |||||||||||||||||
Negative goodwill | (518 | ) | — | 518 | — | — | — | |||||||||||||||||
Frequency usage rights | 1,040,878 | — | (115,417 | ) | — | 1,320 | 926,781 | |||||||||||||||||
Development costs | 208,625 | 113,902 | (115,370 | ) | (324 | ) | 1,327 | 208,160 | ||||||||||||||||
Industrial rights | 7,918 | 3,196 | (1,764 | ) | — | 6 | 9,356 | |||||||||||||||||
Software | 105,198 | 31,451 | (32,807 | ) | (1,216 | ) | 1,653 | 104,279 | ||||||||||||||||
Others | 108,840 | 40,446 | (26,860 | ) | (7,417 | ) | 238 | 115,247 | ||||||||||||||||
Total | 1,959,591 | 188,995 | (430,105 | ) | (8,957 | ) | 25,799 | 1,735,323 | ||||||||||||||||
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Table of Contents
2008 | ||||||||||||||||||||||||
January 1, | Reversal | Impairment | December 31, | |||||||||||||||||||||
2008 | Increase | (Amortization) | Loss | Others | 2008 | |||||||||||||||||||
Goodwill | 371,500 | — | (145,154 | ) | (16,078 | ) | 18,126 | 228,394 | ||||||||||||||||
Negative goodwill | — | — | 65 | — | (65 | ) | — | |||||||||||||||||
Frequency usage rights | 926,781 | 1,005 | (115,649 | ) | — | — | 812,137 | |||||||||||||||||
Development costs | 208,160 | 100,118 | (114,345 | ) | — | (140 | ) | 193,793 | ||||||||||||||||
Industrial rights | 9,356 | 2,324 | (1,825 | ) | — | 348 | 10,203 | |||||||||||||||||
Software | 104,279 | 37,298 | (36,436 | ) | (322 | ) | 1,328 | 106,147 | ||||||||||||||||
Others | 115,247 | 49,027 | (25,135 | ) | (1,035 | ) | (14,540 | ) | 123,564 | |||||||||||||||
Total | 1,735,323 | 189,772 | (438,479 | ) | (17,435 | ) | 5,057 | 1,474,238 | ||||||||||||||||
2007 | ||||||||||||||||
January 1, | Reversal | December 31, | ||||||||||||||
2007 | Increase | (Amortization) | 2007 | |||||||||||||
KTF | 455,397 | — | (130,113 | ) | 325,284 | |||||||||||
Sidus FNH | 15,498 | — | (3,875 | ) | 11,623 | |||||||||||
Oilve Nine | 17,755 | — | (3,551 | ) | 14,204 | |||||||||||
KTFT | (518 | ) | — | 518 | — | |||||||||||
KT FDS | — | 5,772 | (866 | ) | 4,906 | |||||||||||
KTF Music (formerly, “Bluecord Technology Co., Ltd.”) | — | 11,206 | — | 11,206 | ||||||||||||
East Telecom | — | 4,277 | — | 4,277 | ||||||||||||
Total | 488,132 | 21,255 | (137,887 | ) | 371,500 | |||||||||||
2008 | ||||||||||||||||||||
January 1, | Reversal | Impairment | December 31, | |||||||||||||||||
2008 | Increase | (Amortization) | Loss | 2008 | ||||||||||||||||
KTF | 325,284 | — | (130,114 | ) | — | 195,170 | ||||||||||||||
Sidus FNH | 11,623 | — | (3,874 | ) | (5,425 | ) | 2,324 | |||||||||||||
Oilve Nine | 14,204 | — | (3,551 | ) | (10,653 | ) | — | |||||||||||||
KT FDS | 4,906 | — | (1,154 | ) | — | 3,752 | ||||||||||||||
KTF Music (formerly, “Bluecord Technology Co., Ltd.”) | 11,206 | — | (2,241 | ) | — | 8,965 | ||||||||||||||
East Telecom | 4,277 | 1,508 | (1,157 | ) | — | 4,628 | ||||||||||||||
Nasmedia | — | 14,436 | (2,654 | ) | — | 11,782 | ||||||||||||||
Sofnics | — | (65 | ) | 65 | — | — | ||||||||||||||
JB Edu | — | 2,182 | (409 | ) | — | 1,773 | ||||||||||||||
Total | 371,500 | 18,061 | (145,089 | ) | (16,078 | ) | 228,394 | |||||||||||||
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Table of Contents
11. | PRESENT VALUE OF ASSETS AND LIABILITIES |
2007 | ||||||||||||||||
Discount | Collection | Nominal | Present | |||||||||||||
Accounts | Rate (%) | Period | Value | Value | Discount | |||||||||||
Accounts receivable — trade | 5.33~7.04 | 2008 | 302,946 | 299,466 | 3,480 | |||||||||||
Accounts receivable — other | 5.38~8.85 | 2008 | 18,738 | 17,718 | 1,020 | |||||||||||
Long-term accounts receivable — trade | 5.33~7.04 | 2009~2025 | 126,955 | 99,504 | 27,451 | |||||||||||
Long-term accounts receivable — other | 5.38~8.85 | 2009~2011 | 38,438 | 36,171 | 2,267 | |||||||||||
Accounts payable — other | 9.93 | 2008 | 110,000 | 108,920 | 1,080 | |||||||||||
Current portion of long-term bonds and borrowings | 4.23~7.45 | 2008 | 1,020,464 | 1,020,444 | 20 | |||||||||||
Long-term accounts payable — other | 9.93 | 2009~2011 | 456,972 | 413,260 | 43,712 | |||||||||||
Long-term borrowings | 7.35 | 2009~2015 | 4,256 | 3,126 | 1,130 |
2008 | ||||||||||||||||
Discount | Collection | Nominal | Present | |||||||||||||
Accounts | Rate (%) | Period | Value | Value | Discount | |||||||||||
Accounts receivable — trade | 5.23~7.9 | 2009 | 553,806 | 537,973 | 15,833 | |||||||||||
Accounts receivable — other | 5.23~8.85 | 2009 | 32,831 | 31,204 | 1,627 | |||||||||||
Long-term accounts receivable — trade | 5.23~7.9 | 2010~2025 | 335,044 | 287,706 | 47,338 | |||||||||||
Long-term accounts receivable — other | 5.23~8.85 | 2010~2011 | 17,144 | 16,466 | 678 | |||||||||||
Accounts payable — trade | 5.91~10.36 | 2009 | 15,178 | 13,417 | 1,761 | |||||||||||
Accounts payable — other | 5.23~5.83 | 2009 | 134,200 | 132,757 | 1,443 | |||||||||||
Long-term accounts payable — trade | 5.91~10.36 | 2010~2018 | 23,583 | 16,856 | 6,727 | |||||||||||
Long-term accounts payable — other | 6.78~9.93 | 2010~2011 | 323,292 | 300,430 | 22,862 | |||||||||||
Long-term borrowings | 5.23~8.85 | 2010~2015 | 3,564 | 2,693 | 871 |
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Table of Contents
12. | LONG-TERM DEBT |
a. | Bonds |
2007 | ||||||||||||||||||||||
Interest Rate | ||||||||||||||||||||||
Company | Type | Issue Date | Amount | Maturity | Repayment Method | per Annum | ||||||||||||||||
MTNP notes (Note 1) | 6/24/2004 | (USD 600,000 | ) | 6/24/2014 | Payable in full at maturity | 5.88 | % | |||||||||||||||
MTNP notes (Note 1) | 9/7/2004 | (USD100,000 | ) | 9/7/2034 | Payable in full at maturity | 6.50 | % | |||||||||||||||
MTNP notes (Note 1) | 7/15/2005 | (USD 400,000 | ) | 7/15/2015 | Payable in full at maturity | 4.88 | % | |||||||||||||||
MTNP notes (Note 1) | 5/3/2006 | (USD 200,000 | ) | 5/3/2016 | Payable in full at maturity | 5.88 | % | |||||||||||||||
Euro bonds | 4/11/2007 | (USD 200,000 | ) | 4/11/2012 | Payable in full at maturity | 5.13 | % | |||||||||||||||
The 130th Public bond | 1/19/2001 | 1/19/2008 | Payable in full at maturity | 7.28 | % | |||||||||||||||||
The 132nd Public bond | 2/9/2001 | 70,000 | 2/9/2011 | Payable in full at maturity | 7.68 | % | ||||||||||||||||
The 133rd Public bond | 2/12/2001 | 50,000 | 2/12/2008 | Payable in full at maturity | 6.78 | % | ||||||||||||||||
The 138th Public bond | 2/28/2001 | 100,000 | 2/28/2008 | Payable in full at maturity | 7.45 | % | ||||||||||||||||
The 154th Public bond | 7/31/2002 | 220,000 | 7/31/2009 | Payable in full at maturity | 6.70 | % | ||||||||||||||||
The 156th Public bond | 9/30/2002 | 180,000 | 9/30/2009 | Payable in full at maturity | 6.35 | % | ||||||||||||||||
KT | The 158th Public bond | 4/30/2003 | 220,000 | 4/30/2008 | Payable in full at maturity | 5.29 | % | |||||||||||||||
The 159th Public bond | 10/27/2003 | 300,000 | 10/27/2013 | Payable in full at maturity | 5.39 | % | ||||||||||||||||
The 160th Public bond | 11/24/2003 | 200,000 | 11/24/2010 | Payable in full at maturity | 5.45 | % | ||||||||||||||||
The 161st Public bond | 12/23/2003 | 230,000 | 12/23/2010 | Payable in full at maturity | 5.61 | % | ||||||||||||||||
The 162nd Public bond | 2/27/2004 | 320,000 | 2/27/2011 | Payable in full at maturity | 5.52 | % | ||||||||||||||||
The 163rd Public bond | 3/30/2004 | 170,000 | 3/30/2014 | Payable in full at maturity | 5.51 | % | ||||||||||||||||
The 164th Public bond | 6/21/2004 | 260,000 | 6/21/2011 | Payable in full at maturity | 5.22 | % | ||||||||||||||||
The165-1st Public bond | 8/26/2004 | 130,000 | 8/26/2011 | Payable in full at maturity | 4.22 | % | ||||||||||||||||
The165-2nd Public bond | 8/26/2004 | 140,000 | 8/26/2014 | Payable in full at maturity | 4.44 | % | ||||||||||||||||
The166-1st Public bond | 3/21/2005 | 220,000 | 3/21/2010 | Payable in full at maturity | 4.37 | % | ||||||||||||||||
The166-2nd Public bond | 3/21/2005 | 100,000 | 3/21/2012 | Payable in full at maturity | 4.57 | % | ||||||||||||||||
The167-1st Public bond | 4/20/2005 | 100,000 | 4/20/2012 | Payable in full at maturity | 4.59 | % | ||||||||||||||||
The167-2nd Public bond | 4/20/2005 | 100,000 | 4/20/2015 | Payable in full at maturity | 4.84 | % | ||||||||||||||||
The168-1st Public bond | 6/21/2005 | 240,000 | 6/21/2012 | Payable in full at maturity | 4.43 | % | ||||||||||||||||
The168-2nd Public bond | 6/21/2005 | 90,000 | 6/21/2015 | Payable in full at maturity | 4.66 | % | ||||||||||||||||
The 169th Public bond | 4/3/2007 | 140,000 | 4/3/2012 | Payable in full at maturity | 5.01 | % | ||||||||||||||||
KTP | Private bond | 5/3/2006 | 8,333 | 3/3/2009 | Payable in installments | 6.32 | % | |||||||||||||||
Private bond | 12/15/2006 | 9,300 | 12/15/2008 | Payable in full at maturity | 6.25 | % | ||||||||||||||||
KTN | The 18th Private bond | 3/31/2005 | 5,000 | 3/31/2008 | Payable in full at maturity | 5.29 | % | |||||||||||||||
Public bond | 4/17/2007 | 10,000 | 4/17/2010 | Payable in full at maturity | 5.29 | % | ||||||||||||||||
The 44th Public bond | 2/19/2004 | 360,000 | 2/19/2009 | Payable in full at maturity | 5.66 | % | ||||||||||||||||
The 45th Public bond | 3/15/2004 | 320,000 | 3/15/2008 | Payable in full at maturity | 5.24 | % | ||||||||||||||||
KTF | The47-1st Public bond | 7/12/2004 | 230,000 | 7/13/2009 | Payable in full at maturity | 4.95 | % | |||||||||||||||
The47-2nd Public bond | 7/12/2004 | 70,000 | 7/12/2011 | Payable in full at maturity | 5.32 | % | ||||||||||||||||
The 48th Public bond | 2/15/2005 | 200,000 | 2/15/2010 | Payable in full at maturity | 5.31 | % | ||||||||||||||||
The 16th Private bond | 1/4/2005 | 750 | 1/4/2008 | Payable in installments | 4.39 | % | ||||||||||||||||
The19-1st Public bond | 5/10/2005 | 40,000 | 5/10/2008 | Payable in full at maturity | 4.23 | % | ||||||||||||||||
The19-2nd Public bond | 5/10/2005 | 10,000 | 5/10/2010 | Payable in full at maturity | 4.69 | % | ||||||||||||||||
KTR | The21-1~5th Private bond | 6/15/2005 | 4,000 | 6/15/2008 | Payable in installments | 4.58 | % | |||||||||||||||
The 22nd Private bond | 8/31/2005 | 2,500 | 8/31/2008 | Payable in installments | 4.95 | % |
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2007 | ||||||||||||||||||||||
Interest Rate | ||||||||||||||||||||||
Company | Type | Issue Date | Amount | Maturity | Repayment Method | per Annum | ||||||||||||||||
The 23rd Public bond | 9/14/2005 | 30,000 | 9/14/2008 | Payable in full at maturity | 5.02 | % | ||||||||||||||||
The 10th Public bond | 6/18/2007 | 40,000 | 6/18/2010 | Payable in full at maturity | 5.70 | % | ||||||||||||||||
The 11th Private bond | 12/6/2007 | 20,000 | 12/6/2010 | Payable in full at maturity | 6.85 | % | ||||||||||||||||
The 1st Private bond | 3/16/2007 | 30,000 | 3/16/2010 | Payable in full at maturity | 5.42 | % | ||||||||||||||||
The 2nd Private bond | 4/16/2007 | 20,000 | 4/16/2010 | Payable in full at maturity | 5.56 | % | ||||||||||||||||
The 3rd Private bond | 4/19/2007 | 20,000 | 4/19/2008 | Payable in full at maturity | 5.59 | % | ||||||||||||||||
The 4th Public bond | 5/30/2007 | 40,000 | 5/30/2010 | Payable in full at maturity | 5.70 | % | ||||||||||||||||
The 5th Private bond | 6/29/2007 | 20,000 | 6/29/2010 | Payable in full at maturity | 5.67 | % | ||||||||||||||||
The 6-1st Public bond | 8/3/2007 | 20,000 | 8/3/2009 | Payable in full at maturity | 5.64 | % | ||||||||||||||||
KT Capital | The 6-2nd Public bond | 8/3/2007 | 30,000 | 8/3/2010 | Payable in full at maturity | 5.72 | % | |||||||||||||||
The 7-1st Public bond | 8/31/2007 | 30,000 | 8/31/2009 | Payable in full at maturity | 5.99 | % | ||||||||||||||||
The 7-2nd Public bond | 8/31/2007 | 20,000 | 8/31/2010 | Payable in full at maturity | 6.05 | % | ||||||||||||||||
The 8th Private bond | 9/28/2007 | 30,000 | 9/28/2010 | Payable in full at maturity | 6.26 | % | ||||||||||||||||
The 9-1st Public bond | 10/18/2007 | 30,000 | 10/18/2009 | Payable in full at maturity | 6.37 | % | ||||||||||||||||
The 9-2nd Public bond | 10/18/2007 | 20,000 | 10/18/2010 | Payable in full at maturity | 6.44 | % | ||||||||||||||||
The 10th Public bond | 11/12/2007 | 50,000 | 11/12/2008 | Payable in full at maturity | 6.26 | % | ||||||||||||||||
The 11th Public bond | 12/27/2007 | 20,000 | 12/27/2010 | Payable in full at maturity | CD(91D | ) + 1.39% | ||||||||||||||||
Olive Nine | The 5th Private CB (Note 2) | 2/17/2006 | 3,000 | 2/17/2009 | Payable in full at maturity | 10.00 | % | |||||||||||||||
KTF Music (formerly, “Bluecord Technology”) | The 2nd Private bond with warrant (Note 3) | 9/2/2005 | 2,100 | 9/2/2008 | Payable in full at maturity | 7.11 | % | |||||||||||||||
Total | 6,782,283 | |||||||||||||||||||||
Less current portion | (910,316 | ) | ||||||||||||||||||||
Long-term portion | 5,871,967 | |||||||||||||||||||||
Conversion right adjustment | (277 | ) | ||||||||||||||||||||
Repayment premium | 695 | |||||||||||||||||||||
Discount on bonds | (29,558 | ) | ||||||||||||||||||||
Net | 5,842,827 | |||||||||||||||||||||
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2008 | ||||||||||||||||||||||
Interest Rate | ||||||||||||||||||||||
Company | Type | Issue Date | Amount | Maturity | Repayment Method | per Annum | ||||||||||||||||
MTNP notes (Note 1) | 6/24/2004 | (USD 600,000 | ) | 6/24/2014 | Payable in full at maturity | 5.88 | % | |||||||||||||||
MTNP notes (Note 1) | 9/7/2004 | (USD 100,000 | ) | 9/7/2034 | Payable in full at maturity | 6.50 | % | |||||||||||||||
MTNP notes (Note 1) | 7/15/2005 | (USD 400,000 | ) | 7/15/2015 | Payable in full at maturity | 4.88 | % | |||||||||||||||
MTNP notes (Note 1) | 5/3/2006 | (USD 200,000 | ) | 5/3/2016 | Payable in full at maturity | 5.88 | % | |||||||||||||||
Euro bonds | 4/11/2007 | (USD 200,000 | ) | 4/11/2012 | Payable in full at maturity | 5.13 | % | |||||||||||||||
FR notes | 9/11/2008 | (USD 200,000 | ) | 9/11/2013 | Payable in full at maturity | 4.32 | % | |||||||||||||||
The 132nd Public bond | 2/9/2001 | 2/9/2011 | Payable in full at maturity | 7.68 | % | |||||||||||||||||
The 154th Public bond | 7/31/2002 | 220,000 | 7/31/2009 | Payable in full at maturity | 6.70 | % | ||||||||||||||||
The 156th Public bond | 9/30/2002 | 180,000 | 9/30/2009 | Payable in full at maturity | 6.35 | % | ||||||||||||||||
The 159th Public bond | 10/27/2003 | 300,000 | 10/27/2013 | Payable in full at maturity | 5.39 | % | ||||||||||||||||
The 160th Public bond | 11/24/2003 | 200,000 | 11/24/2010 | Payable in full at maturity | 5.45 | % | ||||||||||||||||
The 161st Public bond | 12/23/2003 | 230,000 | 12/23/2010 | Payable in full at maturity | 5.61 | % | ||||||||||||||||
The 162nd Public bond | 2/27/2004 | 320,000 | 2/27/2011 | Payable in full at maturity | 5.52 | % | ||||||||||||||||
The 163rd Public bond | 3/30/2004 | 170,000 | 3/30/2014 | Payable in full at maturity | 5.51 | % | ||||||||||||||||
KT | The 164th Public bond | 6/21/2004 | 260,000 | 6/21/2011 | Payable in full at maturity | 5.22 | % | |||||||||||||||
The165-1st Public bond | 8/26/2004 | 130,000 | 8/26/2011 | Payable in full at maturity | 4.22 | % | ||||||||||||||||
The165-2nd Public bond | 8/26/2004 | 140,000 | 8/26/2014 | Payable in full at maturity | 4.44 | % | ||||||||||||||||
The166-1st Public bond | 3/21/2005 | 220,000 | 3/21/2010 | Payable in full at maturity | 4.37 | % | ||||||||||||||||
The166-2nd Public bond | 3/21/2005 | 100,000 | 3/21/2012 | Payable in full at maturity | 4.57 | % | ||||||||||||||||
The167-1st Public bond | 4/20/2005 | 100,000 | 4/20/2012 | Payable in full at maturity | 4.59 | % | ||||||||||||||||
The167-2nd Public bond | 4/20/2005 | 100,000 | 4/20/2015 | Payable in full at maturity | 4.84 | % | ||||||||||||||||
The168-1st Public bond | 6/21/2005 | 240,000 | 6/21/2012 | Payable in full at maturity | 4.43 | % | ||||||||||||||||
The168-2nd Public bond | 6/21/2005 | 90,000 | 6/21/2015 | Payable in full at maturity | 4.66 | % | ||||||||||||||||
The 169th Public bond | 4/3/2007 | 140,000 | 4/3/2012 | Payable in full at maturity | 5.01 | % | ||||||||||||||||
The 170th Public bond | 1/11/2008 | (JPY 12,500,000 | ) | 1/11/2011 | Payable in full at maturity | 1.45 | % | |||||||||||||||
The 171st Public bond | 2/28/2008 | 100,000 | 2/28/2013 | Payable in full at maturity | 5.41 | % | ||||||||||||||||
The172-1st Public bond | 3/31/2008 | (USD 50,000 | ) | 3/31/2011 | Payable in full at maturity | 4.20 | % | |||||||||||||||
The172-2nd Public bond | 3/31/2008 | (USD 110,000 | ) | 3/31/2012 | Payable in full at maturity | 4.30 | % | |||||||||||||||
The173-1st Public bond | 8/6/2008 | 8/6/2013 | Payable in full at maturity | 6.49 | % | |||||||||||||||||
The173-2nd Public bond | 8/6/2008 | 100,000 | 8/6/2018 | Payable in full at maturity | 6.62 | % | ||||||||||||||||
The174-1st Public bond | 12/19/2008 | 100,000 | 12/19/2010 | Payable in full at maturity | 5.34 | % | ||||||||||||||||
The174-2nd Public bond | 12/19/2008 | 130,000 | 12/19/2011 | Payable in full at maturity | 5.56 | % | ||||||||||||||||
KTP | The 4th Private bond | 5/3/2006 | 1,667 | 3/3/2009 | Payable in installments | 6.66 | % | |||||||||||||||
KTN | Public bond | 4/17/2007 | 10,000 | 4/17/2010 | Payable in full at maturity | 5.29 | % | |||||||||||||||
Public bond | 7/24/2008 | 5,000 | 7/24/2011 | Payable in full at maturity | 6.82 | % | ||||||||||||||||
The 44th Public bond | 2/19/2004 | 360,000 | 2/19/2009 | Payable in full at maturity | 5.66 | % | ||||||||||||||||
The47-1st Public bond | 7/12/2004 | 230,000 | 7/13/2009 | Payable in full at maturity | 4.95 | % | ||||||||||||||||
KTF | The47-2nd Public bond | 7/12/2004 | 70,000 | 7/12/2011 | Payable in full at maturity | 5.32 | % | |||||||||||||||
The 48th Public bond | 2/15/2005 | 200,000 | 2/15/2010 | Payable in full at maturity | 5.31 | % | ||||||||||||||||
The 49th Public bond | 2/25/2008 | (USD 175,000 | ) | 2/25/2011 | Payable in full at maturity | 3.66 | % | |||||||||||||||
The 50th Public bond | 4/28/2008 | (JPY 7,000,000 | ) | 4/28/2011 | Payable in full at maturity | 2.48 | % | |||||||||||||||
The51-1st Public bond | 6/20/2008 | (USD 95,000 | ) | 6/20/2011 | Payable in full at maturity | 3.13 | % | |||||||||||||||
KTF | The51-2nd Public bond | 6/20/2008 | 6/20/2013 | Payable in full at maturity | 6.41 | % | ||||||||||||||||
The52-1st Public bond | 8/4/2008 | 100,000 | 8/4/2011 | Payable in full at maturity | 6.20 | % | ||||||||||||||||
The52-2nd Public bond | 8/4/2008 | 100,000 | 8/4/2013 | Payable in full at maturity | 6.64 | % | ||||||||||||||||
The53-1st Public bond | 12/1/2008 | 20,000 | 12/1/2010 | Payable in full at maturity | 8.23 | % |
F-56
Table of Contents
2008 | ||||||||||||||||||||||
Interest Rate | ||||||||||||||||||||||
Company | Type | Issue Date | Amount | Maturity | Repayment Method | per Annum | ||||||||||||||||
The53-2nd Public bond | 12/1/2008 | 180,000 | 12/1/2011 | Payable in full at maturity | 8.36 | % | ||||||||||||||||
Public bond (the19-2nd) | 5/10/2005 | 10,000 | 5/10/2010 | Payable in full at maturity | 4.69 | % | ||||||||||||||||
The 10th Public bond | 6/18/2007 | 40,000 | 6/18/2010 | Payable in full at maturity | 5.70 | % | ||||||||||||||||
The 11th Private bond | 12/6/2007 | 20,000 | 12/6/2010 | Payable in full at maturity | 6.85 | % | ||||||||||||||||
KTR | The 12th Public bond | 5/23/2008 | 20,000 | 5/23/2011 | Payable in full at maturity | 6.39 | % | |||||||||||||||
The13-1st Public bond | 10/2/2008 | 20,000 | 10/2/2009 | Payable in full at maturity | 8.05 | % | ||||||||||||||||
The13-2nd Public bond | 10/2/2008 | 10,000 | 4/2/2010 | Payable in full at maturity | 8.30 | % | ||||||||||||||||
The 1st Private bond | 3/16/2007 | 30,000 | 3/16/2010 | Payable in full at maturity | 5.80 | % | ||||||||||||||||
The 2nd Private bond | 4/16/2007 | 20,000 | 4/16/2010 | Payable in full at maturity | 5.94 | % | ||||||||||||||||
The 4th Public bond | 5/30/2007 | 40,000 | 5/30/2010 | Payable in full at maturity | 5.70 | % | ||||||||||||||||
The 5th Private bond | 6/29/2007 | 20,000 | 6/29/2010 | Payable in full at maturity | 5.67 | % | ||||||||||||||||
The 6-1st Public bond | 8/3/2007 | 20,000 | 8/3/2009 | Payable in full at maturity | 5.64 | % | ||||||||||||||||
The 6-2nd Public bond | 8/3/2007 | 30,000 | 8/3/2010 | Payable in full at maturity | 5.72 | % | ||||||||||||||||
The 7-1st Public bond | 8/31/2007 | 30,000 | 8/31/2009 | Payable in full at maturity | 5.99 | % | ||||||||||||||||
The 7-2nd Public bond | 8/31/2007 | 20,000 | 8/31/2010 | Payable in full at maturity | 6.05 | % | ||||||||||||||||
The 8th Private bond | 9/28/2007 | 30,000 | 9/28/2010 | Payable in full at maturity | 6.26 | % | ||||||||||||||||
The 9-1st Public bond | 10/18/2007 | 30,000 | 10/18/2009 | Payable in full at maturity | 6.37 | % | ||||||||||||||||
The 9-2nd Public bond | 10/18/2007 | 20,000 | 10/18/2010 | Payable in full at maturity | 6.44 | % | ||||||||||||||||
The 11th Public bond | 12/27/2007 | 20,000 | 12/27/2010 | Payable in full at maturity | CD(91D | ) + 1.39% | ||||||||||||||||
The12-1st Public bond | 1/23/2008 | 30,000 | 1/23/2009 | Payable in full at maturity | 7.50 | % | ||||||||||||||||
The12-2nd Public bond | 1/23/2008 | 30,000 | 7/23/2009 | Payable in full at maturity | 7.60 | % | ||||||||||||||||
KT Capital | The13-1st Public bond | 2/21/2008 | 30,000 | 2/21/2010 | Payable in full at maturity | 6.33 | % | |||||||||||||||
The13-2nd Public bond | 2/21/2008 | 30,000 | 2/21/2011 | Payable in full at maturity | 6.48 | % | ||||||||||||||||
The14-1st Public bond | 3/28/2008 | 10,000 | 3/28/2010 | Payable in full at maturity | 6.37 | % | ||||||||||||||||
The14-2nd Public bond | 3/28/2008 | 10,000 | 3/28/2011 | Payable in full at maturity | 6.47 | % | ||||||||||||||||
The 15th Private bond | 4/21/2008 | 20,000 | 4/21/2010 | Payable in full at maturity | MOR(3M | )+ 1.28% | ||||||||||||||||
The16-1st Public bond | 4/30/2008 | 60,000 | 1/30/2010 | Payable in full at maturity | 6.33 | % | ||||||||||||||||
The16-2nd Public bond | 4/30/2008 | 10,000 | 4/30/2011 | Payable in full at maturity | 6.46 | % | ||||||||||||||||
The17-1st Public bond | 5/30/2008 | 30,000 | 11/30/2009 | Payable in full at maturity | 6.71 | % | ||||||||||||||||
The17-2nd Public bond | 5/30/2008 | 20,000 | 11/30/2009 | Payable in full at maturity | 6.66 | % | ||||||||||||||||
The17-3rd Public bond | 5/30/2008 | 50,000 | 5/30/2013 | Payable in full at maturity | 7.14 | % | ||||||||||||||||
The18-1st Public bond | 6/23/2008 | 30,000 | 12/23/2009 | Payable in full at maturity | 7.00 | % | ||||||||||||||||
The18-2nd Public bond | 6/23/2008 | 40,000 | 6/23/2010 | Payable in full at maturity | 7.12 | % | ||||||||||||||||
The18-3rd Public bond | 6/23/2008 | 20,000 | 6/23/2011 | Payable in full at maturity | 7.22 | % | ||||||||||||||||
The18-4th Public bond | 6/23/2008 | 10,000 | 6/23/2013 | Payable in full at maturity | 7.55 | % | ||||||||||||||||
The19-1st Public bond | 9/11/2008 | 40,000 | 9/11/2009 | Payable in full at maturity | 7.68 | % | ||||||||||||||||
The19-2nd Public bond | 9/11/2008 | 10,000 | 3/11/2010 | Payable in full at maturity | 7.80 | % | ||||||||||||||||
The19-3rd Public bond | 9/11/2008 | 20,000 | 9/11/2010 | Payable in full at maturity | 7.93 | % | ||||||||||||||||
KT Capital | The19-4th Public bond | 9/11/2008 | 10,000 | 9/11/2010 | Payable in full at maturity | CD(91D | )+ 2.10% | |||||||||||||||
The 20th Public bond | 10/27/2008 | 10,000 | 10/27/2009 | Payable in full at maturity | 8.98 | % | ||||||||||||||||
The 21st Public bond | 11/26/2008 | 30,000 | 11/26/2009 | Payable in full at maturity | 9.10 | % | ||||||||||||||||
Total | ||||||||||||||||||||||
Less current portion | (1,311,667 | ) | ||||||||||||||||||||
Long-term portion | 7,705,284 | |||||||||||||||||||||
Discount on bonds | (42,621 | ) | ||||||||||||||||||||
Net | ||||||||||||||||||||||
(Note 1) | As of December 31, 2008, the Company has issued notes in the amount of USD 1,300 million with fixed interest rates under Medium Term Note Program (“MTNP”) registered in the Singapore Stock Exchange, which allows issuance of notes up to USD 2,000 million and the unused balance under the program is USD 700 million. |
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Table of Contents
(Note 2) | Details of convertible bonds without guarantee are as follows : |
Issued amount (in Korean won) | : | |||||||
Stated interest rate (%) | : | 3 | % | |||||
Guaranteed yield rate (%) | : | 10 | % | |||||
Conversion price (in Korean won) | : | |||||||
Convertible period | : | February 17, 2007~February 16, 2009 | ||||||
Number of total convertible shares | : | 2,525,252 shares | ||||||
Converted shares | : | 631,313 shares | ||||||
Unconverted shares | : | 1,893,939 shares |
(Note 3) | Details of bonds with warrants are as follows : |
Issued amount (in Korean won) | : | |||||||
Stated interest rate(%) | : | 7.11 | % | |||||
Exercise price (in Korean won) | : | |||||||
Exercise period | : | September 3, 2006~August 2, 2008 | ||||||
Number of total exercisable shares | : | 664,010 shares | ||||||
Exercised shares | : | — | ||||||
Unexercised shares | : | 664,010 shares | ||||||
Others | : | Subject to request by the holders, certain portion of the bonds are early redeemable before maturity; up to 10 | % of issued amount at one year after 1st anniversary of issuance and 20% of issued amount at the interest payment date after 2nd anniversary of issuance. |
b. | Long-term Borrowings in Korean Won |
2007 | 2008 | |||||||||||||||||||||||
Maturity | Interest Rate | Maturity | Interest Rate | |||||||||||||||||||||
Date | per Annum | Amount | Date | per Annum | Amount | |||||||||||||||||||
Informatization Promotion Fund | 2008~2012 | 4.72~5.39 | % | 2009~2013 | 4.86~6.28 | % | ||||||||||||||||||
Inter-Korean Cooperation Fund | 2026 | 2.00 | % | 5,665 | 2026 | 2.00 | % | 6,415 | ||||||||||||||||
Facility and working capital loans | 2008~2015 | 6.02~7.60 | % | 82,356 | 2009~2015 | 5.00~8.12 | % | 79,611 | ||||||||||||||||
General purpose loans | 2009~2010 | 5.74~6.19 | % | 52,132 | 2009~2011 | 5.74~7.01 | % | 74,034 | ||||||||||||||||
Commercial papers | 2008 | 6.33~6.45 | % | 30,000 | 2011 | 6.55~6.71 | % | 30,000 | ||||||||||||||||
Total | 217,518 | 225,929 | ||||||||||||||||||||||
Less current portion | (105,453 | ) | (78,245 | ) | ||||||||||||||||||||
Long-term portion | 112,065 | 147,684 | ||||||||||||||||||||||
Less present value discount | (1,130 | ) | (871 | ) | ||||||||||||||||||||
Net | ||||||||||||||||||||||||
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c. | Long-term Borrowings in Foreign Currency |
2007 | ||||||||||||||||
Amount | ||||||||||||||||
Maturity | Interest Rate | Foreign | Korean Won | |||||||||||||
Date | per Annum (%) | Currencies | Equivalent | |||||||||||||
New Telephone Company, Inc. | 2008 | Libor+3.50 | RUB 16,364 | |||||||||||||
New Telephone Company, Inc. | 2009 | Libor+3.50 | RUB 32,728 | 1,883 | ||||||||||||
KT Capital | 2008~2010 | Libor+0.99 | USD 23,000 | 21,579 | ||||||||||||
Total | RUB 49,092 USD 23,000 | 24,404 | ||||||||||||||
Less current portion | (RUB 16,364 | ) (USD 4,000) | (4,695 | ) | ||||||||||||
Net | RUB 32,728 USD 19,000 | |||||||||||||||
2008 | ||||||||||||||||||||
Amount | ||||||||||||||||||||
Maturity | Interest Rate | Foreign | Korean Won | |||||||||||||||||
Company | Date | per Annum (%) | Currencies | Equivalent | ||||||||||||||||
KTSC | 2013 | Libor+1.70 | USD 28,800 | |||||||||||||||||
KTF | 2010~2011 | 4.87~5.77 | USD 100,000 | 125,750 | ||||||||||||||||
KT Capital | 2010 | Libor+0.99 | USD 19,000 | 23,893 | ||||||||||||||||
NTC | 2010 | Libor+3.50 | RUB 29,380 | 1,260 | ||||||||||||||||
14.00 | RUB 2,877 | 123 | ||||||||||||||||||
East Telecom | 2011 | 16.50 | SUM 890,000 | 810 | ||||||||||||||||
Total | USD147,800 RUB 32,257 SUM 890,000 | 188,052 | ||||||||||||||||||
Less current portion | (USD 40,400 | ) | (50,803 | ) | ||||||||||||||||
Net | USD 107,400 RUB 32,257 SUM 890,000 | |||||||||||||||||||
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d. | Repayment Schedule |
Bonds | ||||||||||||||||||||||||
Year Ending | In Local | In Foreign | Borrowings in | Borrowings in | ||||||||||||||||||||
December 31, | Currency | Currency | Sub-total | Local Currency | Foreign Currency | Total | ||||||||||||||||||
2009 | 1,311,667 | — | 1,311,667 | 50,803 | 1,440,715 | |||||||||||||||||||
2010 | 1,490,000 | — | 1,490,000 | 63,710 | 78,594 | 1,632,304 | ||||||||||||||||||
2011 | 1,255,000 | 774,209 | 2,029,209 | 68,789 | 46,583 | 2,144,581 | ||||||||||||||||||
2012 | 580,000 | 389,825 | 969,825 | 5,238 | 8,048 | 983,111 | ||||||||||||||||||
2013 | 730,000 | 251,500 | 981,500 | 1,519 | 4,024 | 987,043 | ||||||||||||||||||
Thereafter | 600,000 | 1,634,750 | 2,234,750 | 8,428 | — | 2,243,178 | ||||||||||||||||||
Total | ||||||||||||||||||||||||
13. | PROVISIONS |
2007 | ||||||||||||||||||||||||
January 1, | Increase | Decrease | December 31, | |||||||||||||||||||||
2007 | (Note 7) | Reversal | Use | Other, Net | 2007 | |||||||||||||||||||
Current portion: | ||||||||||||||||||||||||
Litigation (Note 1) | ) | ) | ||||||||||||||||||||||
KT members points (Note 2) | 1,402 | 1,600 | — | (1,251 | ) | — | 1,751 | |||||||||||||||||
Let’s 010 call bonus points (Note 5) | 497 | — | — | (535 | ) | 4,370 | 4,332 | |||||||||||||||||
Sales warranty (Note 3) | 3,505 | 10,549 | — | (8,642 | ) | — | 5,412 | |||||||||||||||||
Others | 305 | 2,902 | (12 | ) | (122 | ) | — | 3,073 | ||||||||||||||||
Sub total | 10,700 | 49,320 | (4,982 | ) | (11,991 | ) | 4,370 | 47,417 | ||||||||||||||||
Non-current portion: | ||||||||||||||||||||||||
Call bonus points (Note 4) | 72,693 | — | (44,097 | ) | (8,509 | ) | — | 20,087 | ||||||||||||||||
Let’s 010 call bonus points (Note 5) | 17,758 | — | (829 | ) | (5,492 | ) | (6,800 | ) | 4,637 | |||||||||||||||
Others | 1,617 | 133 | (1,037 | ) | (17 | ) | — | 696 | ||||||||||||||||
Sub total | 92,068 | 133 | (45,963 | ) | (14,018 | ) | (6,800 | ) | 25,420 | |||||||||||||||
Total | ) | ) | ) | |||||||||||||||||||||
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2008 | ||||||||||||||||||||||||
January 1, | Decrease | Other, | December 31, | |||||||||||||||||||||
2008 | Increase | Reversal | Use | Net | 2008 | |||||||||||||||||||
Current portion: | ||||||||||||||||||||||||
Litigation (Note 1) | ) | ) | ||||||||||||||||||||||
KT members points (Note 2) | 1,751 | 257 | (1,045 | ) | (282 | ) | — | 681 | ||||||||||||||||
KT points (Note 4) | — | — | — | (5,414 | ) | 10,188 | 4,774 | |||||||||||||||||
Let’s 010 call bonus points (Note 5) | 4,332 | — | — | (4,493 | ) | 5,665 | 5,504 | |||||||||||||||||
Sales warranty (Note 3) | 5,412 | 8,623 | — | (8,736 | ) | — | 5,299 | |||||||||||||||||
Others | 3,073 | 5,908 | (7 | ) | (5,989 | ) | — | 2,985 | ||||||||||||||||
Sub total | 47,417 | 33,536 | (1,053 | ) | (56,938 | ) | 15,853 | 38,815 | ||||||||||||||||
Non-current portion: | ||||||||||||||||||||||||
KT points (Note 4) | 20,087 | — | (2,800 | ) | — | (10,188 | ) | 7,099 | ||||||||||||||||
Let’s 010 call bonus points (Note 5) | 4,637 | 6,137 | — | — | (5,665 | ) | 5,109 | |||||||||||||||||
Asset retirement obligation (Note 6) | — | 20,382 | — | — | 51,151 | 71,533 | ||||||||||||||||||
Others | 696 | 925 | (216 | ) | — | — | 1,405 | |||||||||||||||||
Sub total | 25,420 | 27,444 | (3,016 | ) | — | 35,298 | 85,146 | |||||||||||||||||
Total | ) | ) | ||||||||||||||||||||||
(Note 1) | The amount recognized as litigation provision represents the estimate of payments required to settle the obligation. |
(Note 2) | The Company recorded provisions for the KT members’ points, for VIP customers of the fixed-line or mobile telephone users who are entitled to receive certain goods and other benefits with |
(Note 3) | KTFT, a subsidiary, recorded sales warranty provisions based on the estimated warranty cost for the products sold. Sales warranty provisions are calculated in proportion to cost of goods sold based on the historical defect experiences. |
(Note 4) | The amount recognized as call bonus points represents the estimate of payments for KT points which are provided to fixed-line customers based on the usage of the services. Once certain criteria are met, customers are entitled to receive certain goods and other benefits from the Company. Such provision is reviewed at each balance sheet date and adjusted to reflect the current best estimate when new estimates are necessary as a result of changes in circumstances, which were used as the bases for such estimates, or an acquisition of new information or additional experience on the usage rate, the expiration of points and others. |
(Note 5) | The Company recorded provision for the Let’s 010 (KT-PCS) call bonus points provided to its PCS subscribers who are entitled to receive certain goods and other benefits from the Company. |
(Note 6) | When the Company is responsible for restoration of leased facility after termination of the lease contract, the present value of expected future expenditure for the restoration is recorded as a liability. |
(Note 7) | Amount until the date of acquisition of the newly consolidated entities in 2007 was excluded. |
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14. | LEASE |
a. | Lessees |
i) | Finance Lease |
2007 | 2008 | |||||||
Acquisition cost | 66,965 | 67,208 | ||||||
Accumulated depreciation | (44,482 | ) | (53,596 | ) | ||||
Net balance | 22,483 | 13,612 | ||||||
Depreciation | 14,742 | 8,852 | ||||||
Year Ending December 31, | Lease Payment | |||
2009 | 11,038 | |||
2010~2013 | 7,588 | |||
Total | 18,626 | |||
Less amounts representing interest | (1,139 | ) | ||
Principal amount | 17,487 | |||
Less current portion | (10,185 | ) | ||
Net | 7,302 | |||
ii) | Operating Lease |
Year Ending December 31, | Lease Payment | |||
2009 | 1,040 | |||
2010 | 184 | |||
Total | 1,224 | |||
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b. | Lessors |
i) | Finance Lease |
Year Ending December 31, | Lease Payment | |||
2009 | 185,312 | |||
2010~2013 | 290,552 | |||
Thereafter | 5,608 | |||
Total | 481,472 | |||
Less amounts representing interest | (3,722 | ) | ||
Principal amount | 477,750 | |||
Less current portion | (183,309 | ) | ||
Net | 294,441 | |||
ii) | Operating Lease |
Year Ending December 31, | Lease Payment | |||
2009 | 36,556 | |||
2010~2013 | 27,218 | |||
Total | 63,774 | |||
15. | REFUNDABLE DEPOSITS FOR TELEPHONE INSTALLATION |
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16. | ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES |
2007 | 2008 | |||||||||||||||
Korean | Korean | |||||||||||||||
Foreign | Won | Foreign | Won | |||||||||||||
Currencies | Equivalent | Currencies | Equivalent | |||||||||||||
Assets: | ||||||||||||||||
Cash and cash equivalents | USD 18,346 | 17,211 | USD 26,124 | 32,851 | ||||||||||||
JPY 12,067 | 101 | JPY 20,278 | 282 | |||||||||||||
Short-term investment assets | USD 15,327 | 14,380 | USD 15,327 | 19,273 | ||||||||||||
Accounts receivable — trade | USD 168,404 | 157,996 | USD 164,536 | 206,905 | ||||||||||||
JPY 6,898 | 57 | JPY 178,880 | 2,493 | |||||||||||||
SDR 19,033 | 28,187 | SDR 17,623 | 34,301 | |||||||||||||
EUR 286 | 395 | EUR 486 | 864 | |||||||||||||
Loans | USD 23,000 | 21,579 | USD 49,000 | 61,618 | ||||||||||||
Accounts receivable — other | USD 506 | 476 | USD 2,975 | 3,741 | ||||||||||||
— | — | JPY 2,139 | 30 | |||||||||||||
Guarantee deposits | USD 557 | 523 | USD 557 | 700 | ||||||||||||
Deposits provided | USD 24 | 22 | USD 10 | 12 | ||||||||||||
USD 226,164 | USD 258,529 | |||||||||||||||
JPY 18,965 | JPY 201,297 | |||||||||||||||
SDR 19,033 | SDR 17,623 | |||||||||||||||
Total assets | EUR 286 | 240,927 | EUR 486 | 363,070 | ||||||||||||
Liabilities: | ||||||||||||||||
Accounts payable — trade | USD 158,782 | 148,969 | USD 135,049 | 169,824 | ||||||||||||
JPY 107,080 | 892 | JPY 134,945 | 1,882 | |||||||||||||
SDR 16,350 | 24,213 | SDR 12,413 | 24,160 | |||||||||||||
EUR 123 | 170 | EUR 468 | 831 | |||||||||||||
AUD 112 | 92 | AUD 17 | 15 | |||||||||||||
Accounts payable — other | USD 18,180 | 17,057 | USD 2,227 | 2,800 | ||||||||||||
JPY 507,945 | 4,233 | — | — | |||||||||||||
GBP 194 | 363 | GBP 1 | 2 | |||||||||||||
KWD 4 | 13 | — | — | |||||||||||||
EUR 540 | 745 | EUR 25 | 44 | |||||||||||||
— | — | CNY 6 | 1 | |||||||||||||
— | — | HKD 17 | 3 | |||||||||||||
USD 25,067 | 23,517 | USD 2,601 | 3,271 | |||||||||||||
Short-term borrowings | JPY 267,296 | 2,227 | JPY 58,587 | 817 | ||||||||||||
Withholdings | USD 39 | 37 | USD 215 | 271 | ||||||||||||
Accrued expenses | USD 524 | 492 | USD 1,470 | 1,849 | ||||||||||||
EUR 15 | 21 | EUR 15 | 26 | |||||||||||||
Current portion of bonds and long-term borrowings | — | — | USD 6,400 | 8,048 | ||||||||||||
Key money deposits | — | — | USD 14 | 18 | ||||||||||||
Bonds and long-term borrowings | USD 1,523,000 | 1,428,879 | USD 2,271,400 | 2,856,286 | ||||||||||||
— | — | JPY 19,500,000 | 271,808 | |||||||||||||
USD 1,725,592 | USD 2,419,376 | |||||||||||||||
SDR 16,350 | SDR 12,413 | |||||||||||||||
EUR 678 | EUR 508 | |||||||||||||||
AUD 112 | AUD 17 | |||||||||||||||
JPY 882,321 | JPY 19,693,532 | |||||||||||||||
GBP 194 | GBP 1 | |||||||||||||||
KWD 4 | — | |||||||||||||||
— | CNY 6 | |||||||||||||||
Total liabilities | — | 1,651,920 | HKD 17 | 3,341,956 | ||||||||||||
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17. | TRANSACTIONS AND BALANCES WITH RELATED PARTIES |
Related Party | Account | 2007 | 2008 | |||||||
Subsidiary: | ||||||||||
KTF | Receivables | 47,850 | 52,750 | |||||||
Payables | 188,701 | 172,700 | ||||||||
Key money deposits received | 23,988 | 21,392 | ||||||||
KTH | Receivables | 777 | 1,320 | |||||||
Accrued expenses | 12,943 | 12,046 | ||||||||
KTN | Receivables | 7,351 | 5,413 | |||||||
Payables | 45,508 | 42,912 | ||||||||
KTL | Receivables | 681 | 99 | |||||||
Payables | 20,408 | 24,188 | ||||||||
KTFT | Receivables | 629 | 2,496 | |||||||
Payables | 13,010 | 11,117 | ||||||||
KTC | Receivables | 1,844 | 2,010 | |||||||
Payables | 15,298 | 19,403 | ||||||||
KTR | Receivables | 1,077 | 60 | |||||||
Payables | 58,912 | 56,128 | ||||||||
KTP | Receivables | 776 | 1,225 | |||||||
Payables | 50 | 1,474 | ||||||||
KT Capital | Receivables | 4 | 1 | |||||||
Payables | 3,823 | 42,074 | ||||||||
KTDS | Receivables | — | 5 | |||||||
Payables | — | 27,864 | ||||||||
Others | Receivables | 3,933 | 3,275 | |||||||
Payables | 8,379 | 4,203 | ||||||||
Equity method investee: | ||||||||||
KDB | Receivables | 6,944 | 6,453 | |||||||
Payables | 7,682 | 7,308 | ||||||||
KID | Receivables | 1,074 | 1,269 | |||||||
Payables | 15,763 | 14,700 | ||||||||
CURD (formerly, “KNRDC”) | Receivables | 33 | 1 | |||||||
Payables | 11,486 | 4,415 | ||||||||
KIS | Receivables | 18 | 570 | |||||||
Payables | 12,211 | 8,514 | ||||||||
Goodmorning F Co., Ltd. | Payables | 8,267 | 7,266 | |||||||
eNtoB Corp. | Payables | 17,198 | 10,585 | |||||||
Korea Seoul Contact all Co., Ltd. | Payables | 3,482 | 4,829 | |||||||
Korea Service and Communication Co., Ltd. | Payables | 2,768 | 3,247 | |||||||
Korea Call Center Co., Ltd. | Payables | 2,395 | 3,231 | |||||||
TMworld Co., Ltd. | Payables | 2,364 | 3,217 | |||||||
UMS&C | Payables | 2,582 | 3,075 | |||||||
Information Technology Service Bukbu Corporation | Payables | — | 3,854 | |||||||
Information Technology Solution Nambu Corporation | Payables | — | 4,606 | |||||||
Information Technology Solution Seobu Corporation | Payables | — | 3,777 | |||||||
Information Technology Solution Busan Corporation | Payables | — | 4,321 | |||||||
Information Technology Solution Jungbu Corporation | Payables | — | 4,310 | |||||||
Information Technology Solution Honam Corporation | Payables | — | 3,713 | |||||||
Information Technology Solution Daegu Corporation | Payables | — | 2,567 | |||||||
Other | Receivables | 14 | 738 | |||||||
Payables | 1,110 | 3,289 | ||||||||
Total | Receivables | 73,005 | 77,685 | |||||||
Payables | 478,328 | 536,325 | ||||||||
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Related Party | Transactions | Account | 2006 | 2007 | 2008 | |||||||||||
Subsidiary: | ||||||||||||||||
KTF | Leased line charges and other | Operating revenue | 424,512 | 451,668 | 443,880 | |||||||||||
Purchase of PCS networks and other | Operating expense | 730,399 | 761,299 | 756,002 | ||||||||||||
KTH | Leased line charges and other | Operating revenue | 3,493 | 5,071 | 10,935 | |||||||||||
Commission and other | Operating expense | 41,020 | 46,510 | 45,396 | ||||||||||||
KTN | Leased line charges and other | Operating revenue | 39,644 | 38,663 | 38,970 | |||||||||||
Cost of system integration (“SI”), network integration business and other | Operating expense | 172,716 | 147,994 | 178,408 | ||||||||||||
KTL | Leased line charges and other | Operating revenue | 10,605 | 1,710 | 1,311 | |||||||||||
Commissions and other | Operating expense | 98,277 | 86,188 | 79,428 | ||||||||||||
KTFT | Telecommunication revenue and other | Operating revenue | 1,175 | 3,327 | 2,347 | |||||||||||
Cost of goods sold and other | Operating expense | 86,720 | 88,443 | 52,847 | ||||||||||||
KTC | Telecommunication revenue and other | Operating revenue | 976 | 1,027 | 1,912 | |||||||||||
Commissions and other | Operating expense | 28,004 | 24,226 | 22,573 | ||||||||||||
KTR | Telecommunication revenue and other | Operating revenue | 2,549 | 2,600 | 2,232 | |||||||||||
Commissions and other | Operating expense | 34,394 | 42,991 | 44,917 | ||||||||||||
KTP | Telecommunication revenue and other | Operating revenue | 21,531 | 12,655 | 10,716 | |||||||||||
Commissions and other | Operating expense | 1,681 | 1,071 | 946 | ||||||||||||
KT Capital | Telecommunication revenue and other | Operating revenue | — | 45 | 87 | |||||||||||
Interest expense of lease and other | Operating expense | — | 88 | 2,129 | ||||||||||||
KTDS | Telecommunication revenue and other | Operating revenue | — | — | 3,106 | |||||||||||
Commissions and other | Operating expense | — | — | 55,101 | ||||||||||||
Other | Telecommunication revenue and other | Operating revenue | 2,925 | 11,043 | 12,815 | |||||||||||
Commissions and other | Operating expense | 7,323 | 23,722 | 26,116 | ||||||||||||
Equity method investee: | ||||||||||||||||
KDB | SI revenue and other | Operating revenue | 89,520 | 86,363 | 77,414 | |||||||||||
Commission and other | Operating expense | 5,591 | 5,497 | 1,822 | ||||||||||||
KID | Rent and other | Operating revenue | 12,666 | 12,419 | 14,051 | |||||||||||
Commission and other | Operating expense | 111,425 | 95,117 | 91,034 | ||||||||||||
Goodmorning F Co., Ltd. | Telecommunication revenue and other | Operating revenue | 449 | 494 | 487 | |||||||||||
Commission and other | Operating expense | 50,677 | 47,789 | 42,830 | ||||||||||||
CURD (formerly, “KNRDC”) | Telecommunication revenue and other | Operating revenue | 649 | 773 | 459 | |||||||||||
Commission and other | Operating expense | 58,035 | 38,773 | 23,008 | ||||||||||||
KIS | Telecommunication revenue and other | Operating revenue | 17,610 | 18,064 | 17,298 | |||||||||||
Commission and other | Operating expense | 75,806 | 68,892 | 50,403 | ||||||||||||
eNtoB Corp. | Commission and other | Operating expense | 132,655 | 129,802 | 110,753 | |||||||||||
MOS facilities (formerly, “Mostech”) | Telecommunication revenue and other | Operating revenue | — | 207 | 342 | |||||||||||
Commission and other | Operating expense | — | 13,387 | 8,107 | ||||||||||||
Korea Seoul Contact all Co., Ltd. | Commission and other | Operating expense | — | 37,184 | 41,426 | |||||||||||
Korea Service and Communication Co., Ltd. | Commission and other | Operating expense | — | 30,428 | 30,761 | |||||||||||
Korea Call Center Co., Ltd. | Commission and other | Operating expense | — | 27,460 | 28,965 | |||||||||||
TMworld Co., Ltd. | Commission and other | Operating expense | — | 26,983 | 29,478 | |||||||||||
UMS&C | Commission and other | Operating expense | — | 26,434 | 29,921 | |||||||||||
Information Technology Service Bukbu Corporation | Commission and other | Operating expense | — | — | 11,802 | |||||||||||
Information Technology Solution Nambu Corporation | Commission and other | Operating expense | — | — | 13,954 | |||||||||||
Information Technology Solution Seobu Corporation | Commission and other | Operating expense | — | — | 12,430 | |||||||||||
Information Technology Solution Busan Corporation | Commission and other | Operating expense | — | — | 11,282 | |||||||||||
Information Technology Solution Jungbu Corporation | Commission and other | Operating expense | — | — | 12,569 | |||||||||||
Information Technology Solution Honam Corporation | Commission and other | Operating expense | — | — | 11,907 | |||||||||||
Information Technology Solution Daegu Corporation | Commission and other | Operating expense | — | — | 6,690 | |||||||||||
Other | Telecommunication revenue and other | Operating revenue | 582 | 3,020 | 8,218 | |||||||||||
Commission and other | Operating expense | 35,986 | 2,261 | 16,413 | ||||||||||||
Total | Revenues | 628,886 | 649,149 | 646,580 | ||||||||||||
Expenses | 1,670,709 | 1,772,539 | 1,849,418 | |||||||||||||
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2006 | 2007 | 2008 | Description | |||||||||||
Benefits | 20,878 | 19,397 | 20,203 | Salaries, bonuses and other allowances, retirement benefits, medical benefits and other | ||||||||||
Share-based payments | 227 | 1,047 | 1,420 | Other share-based payments and others | ||||||||||
Total | 21,105 | 20,444 | 21,623 | |||||||||||
Creditor | Debtor | Account | 2007 | 2008 | ||||||||||
KTFT | KTF | Accounts receivable — trade | 92,269 | 59,902 | ||||||||||
KTR | KTP | Long-term accounts receivable — trade and others | 31,303 | 29,164 | ||||||||||
Other | 35,066 | 68,261 | ||||||||||||
Total | 158,638 | 157,327 | ||||||||||||
Seller | Purchaser | 2006 | 2007 | 2008 | ||||||||||
KTFT | KTF | 218,924 | 358,150 | 304,361 | ||||||||||
KTF | KTF M&S | — | 137,602 | 398,556 | ||||||||||
Other | 90,291 | 163,213 | 412,795 | |||||||||||
Total | 309,215 | 658,965 | 1,115,712 | |||||||||||
Guarantor | Guarantee | Description | Amount | |||||
KTN | KTR | Guarantee for loan | 10,352 | |||||
KTF Music | Music City Media | Joint liability on guarantee for borrowings | 61 | |||||
Olive Nine | Olive Nine Entertainment | Joint liability on guarantee for borrowings | 34 | |||||
Total | 10,447 | |||||||
18. | COMMON STOCK AND CAPITAL SURPLUS |
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19. | RETAINED EARNINGS RESTRICTED IN USE |
Description | 2007 | 2008 | ||||||
Net income | 1,170,978 | 513,290 | ||||||
Cumulative effect of changes in accounting policies | — | 3,852 | ||||||
Other comprehensive income (loss): | ||||||||
Gain on translation of foreign operations | 55 | 13,559 | ||||||
Loss on translation of foreign operations (Tax effect: | 22,136 | 11,779 | ||||||
Unrealized gain on available-for-sale securities (Tax effect: | 4,164 | (8,939 | ) | |||||
Unrealized loss on available-for-sale securities (Tax effect: | — | (7,545 | ) | |||||
Increase in equity of associates (Tax effect: ( | (714 | ) | 9,954 | |||||
Decrease in equity of associates (Tax effect: ( | 3,762 | 961 | ||||||
Gain on valuation of derivatives for cash flow hedge (Tax effect: ( | 2,024 | 9,374 | ||||||
Loss on valuation of derivatives for cash flow hedge (Tax effect: | — | (18,370 | ) | |||||
Comprehensive income | 1,202,405 | 527,915 | ||||||
Attributable to : Equity holders of the parent | 1,082,829 | 462,258 | ||||||
Minority interest | 119,576 | 65,657 | ||||||
1,202,405 | 527,915 | |||||||
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21. | SHARE-BASED PAYMENTS |
1st Grant | 2nd Grant | 3rd Grant | 4th Grant | 5th Grant | ||||||
Grant date | Dec. 26, 2002 | Sep. 16, 2003 | Dec. 12, 2003 | Feb. 4, 2005 | Apr. 28, 2005 | |||||
Grantee | Executives | Outside directors | Executives | Executives | Executives | |||||
Number of basic allocated shares upon grant | 460,000 | 36,400 | 80,000 | 50,800 | 45,700 | |||||
Number of additional shares related to business performance upon grant | 220,000 | — | 40,000 | 20,000 | 20,000 | |||||
Number of shares expected to be exercised upon grant | 562,958 | 36,400 | 106,141 | 60,792 | 55,692 | |||||
Number of settled or forfeited shares | 191,326 | 33,400 | 106,141 | 10,800 | 65,700 | |||||
Number of allocated shares as of December 31, 2008 | 300,415 | 3,000 | — | 40,000 | — | |||||
Number of additional shares related to business performance as of December 31, 2008 | 71,217 | — | — | 3,153 | — | |||||
Number of shares expected to be exercised | 371,632 | 3,000 | — | 43,153 | — | |||||
Fair value (in Korean won) | ||||||||||
Total compensation cost | ||||||||||
(in millions of Korean won) | ||||||||||
Exercise price (in Korean won) | ||||||||||
Exercise period | Dec.27, 2004 | Sep.17, 2005 | Dec.13, 2005 | Feb. 5, 2007 | Apr. 29, 2007 | |||||
~Dec. 26, 2009 | ~Sep.16, 2010 | ~Dec.12, 2010 | ~Feb. 4, 2012 | ~Apr. 28, 2012 | ||||||
Valuation method | Fair value method | Fair value method | Fair value method | Fair value method | Fair value method |
1st Grant | 2nd Grant | 3rd Grant | 4th Grant | 5th Grant | ||||||
Risk free interest rate | 5.46% | 4.45% | 5.09% | 4.43% | 4.07% | |||||
Expected duration | 4.5 years to | 4.5 years | 4.5 years to | 4.5 years to | 4.5 years to | |||||
5.5 years | 5.5 years | 5.5 years | 5.5 years | |||||||
Expected volatility | 49.07% | 34.49% | 31.26% | 33.41% | 33.51% | |||||
~ 49.90% | ~ 33.90% | ~ 42.13% | ~ 35.92% | |||||||
Expected dividend yield ratio | 1.10% | 1.57% | 1.57% | 5.86% | 5.86% |
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1st Grant | 2nd Grant | 3rd Grant | 4th Grant | 5th Grant | Total | |||||||||||||||||||
Total compensation costs before adjustment | 10,602 | 453 | 1,160 | 749 | 586 | 13,550 | ||||||||||||||||||
Total compensation costs cancelled | (2,291 | ) | (415 | ) | (1,160 | ) | (218 | ) | (586 | ) | (4,670 | ) | ||||||||||||
Total compensation costs after adjustment | 8,311 | 38 | — | 531 | — | 8,880 | ||||||||||||||||||
Compensation costs recognized in prior years | (8,311 | ) | (38 | ) | — | (531 | ) | — | (8,880 | ) | ||||||||||||||
Compensation costs to be reflected in current year | — | — | — | — | — | — | ||||||||||||||||||
Compensation costs recognized in current year | — | — | — | — | — | — | ||||||||||||||||||
Compensation costs to be recognized after current year | — | — | — | — | — | — | ||||||||||||||||||
1st Grant | 2nd Grant | |||
Grant date | March 29, 2007 | March 27, 2008 | ||
Grantee | Registered directors | Registered directors | ||
Estimated number of shares granted upon grant | 23,925 shares | 29,481 shares | ||
Service condition: one year | Service condition: one year | |||
Non-market performance condition: | Non-market performance condition: | |||
Vesting Conditions | achievement of performance | achievement of performance | ||
Fair value per option (in Korean won) | ||||
Total compensation costs (in Korean won) | ||||
Estimated exercise date | March 29, 2008 | March 27, 2009 | ||
Valuation method | Fair value method | Fair value method |
1st Grant | 2nd Grant | |||||||
Total compensation costs | 1,022 | 1,420 | ||||||
Compensation costs recognized in prior years | (1,022 | ) | — | |||||
Compensation costs to be reflected in current year | — | 1,420 | ||||||
Compensation costs recognized in current year | — | (1,420 | ) | |||||
Compensation costs to be recognized after current year | — | — | ||||||
F-70
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22. | TREASURY STOCK |
2007 | ||||||||||||||||||||||||||||||||||||||||
January 1, 2007 | Increase | Disposal | Retirement | December 31, 2007 | ||||||||||||||||||||||||||||||||||||
Number of | Number of | Number of | Number of | Number of | ||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||
Direct purchase by the Securities and Exchange Act | 70,273,052 | 3,733,861 | 4,425,000 | 196,329 | (16,645 | ) | (884 | ) | (4,425,000 | ) | (196,329 | ) | 70,256,407 | 3,732,977 | ||||||||||||||||||||||||||
Indirect purchase through trust agreement and other | 1,259,170 | 92,711 | — | — | — | — | — | — | 1,259,170 | 92,711 | ||||||||||||||||||||||||||||||
71,532,222 | 3,826,572 | 4,425,000 | 196,329 | (16,645 | ) | (884 | ) | (4,425,000 | ) | (196,329 | ) | 71,515,577 | 3,825,688 | |||||||||||||||||||||||||||
2008 | ||||||||||||||||||||||||||||||||||||||||
January 1, 2008 | Increase | Disposal | Retirement | December 31, 2008 | ||||||||||||||||||||||||||||||||||||
Number of | Number of | Number of | Number of | Number of | ||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||
Direct purchase by the Securities and Exchange Act | 70,256,407 | 3,732,977 | 1,666,700 | 73,807 | (15,173 | ) | (807 | ) | (1,666,700 | ) | (73,807 | ) | 70,241,234 | 3,732,170 | ||||||||||||||||||||||||||
Indirect purchase through trust agreement and other | 1,259,170 | 92,711 | — | — | — | — | — | — | 1,259,170 | 92,711 | ||||||||||||||||||||||||||||||
71,515,577 | 3,825,688 | 1,666,700 | 73,807 | (15,173 | ) | (807 | ) | (1,666,700 | ) | (73,807 | ) | 71,500,404 | 3,824,881 | |||||||||||||||||||||||||||
23. | OPERATING REVENUES |
2006 | 2007 | 2008 | ||||||||||
Internet services | 2,471,086 | 2,497,897 | 2,678,513 | |||||||||
Data communication services | 1,284,213 | 1,270,607 | 1,335,728 | |||||||||
Telephone services | 5,817,000 | 5,592,349 | 5,199,711 | |||||||||
PCS services | 5,510,319 | 5,874,610 | 6,261,045 | |||||||||
PCS handsets sales | 1,888,978 | 2,323,828 | 2,867,216 | |||||||||
Other | 853,284 | 1,100,791 | 1,302,330 | |||||||||
Total | 17,824,880 | 18,660,082 | 19,644,543 | |||||||||
F-71
Table of Contents
24. | CONSTRUCTION CONTRACTS |
2006 | ||||||||||||||||
Beginning Contract | Increase | Recognized as | Ending Contract | |||||||||||||
Balance | (Decrease) | Revenue (Note) | Balance | |||||||||||||
Jungja Dong, Suwon | 48,657 | — | (21,499 | ) | 27,158 | |||||||||||
Sungsu Dong, Seoul | 140,000 | 11,081 | (34,114 | ) | 116,967 | |||||||||||
Bugae Dong, Incheon | 191,713 | — | (7,534 | ) | 184,179 | |||||||||||
Gaya Dong, Busan | 11,055 | (36 | ) | (11,019 | ) | — | ||||||||||
Total | 391,425 | 11,045 | (74,166 | ) | 328,304 | |||||||||||
2007 | ||||||||||||||||
Beginning Contract | Recognized as | Ending Contract | ||||||||||||||
Balance | Increase | Revenue (Note) | Balance | |||||||||||||
Jungja Dong, Suwon | 27,158 | 37 | (26,916 | ) | 279 | |||||||||||
Sungsu Dong, Seoul | 116,967 | 1,600 | (54,731 | ) | 63,836 | |||||||||||
Bugae Dong, Incheon | 184,179 | 6,260 | (33,347 | ) | 157,092 | |||||||||||
Total | 328,304 | 7,897 | (114,994 | ) | 221,207 | |||||||||||
2008 | ||||||||||||||||
Beginning Contract | Recognized as | Ending Contract | ||||||||||||||
Balance | Increase | Revenue (Note) | Balance | |||||||||||||
Jungja Dong, Suwon | 279 | — | (279 | ) | — | |||||||||||
Sungsu Dong, Seoul | 63,836 | — | (50,308 | ) | 13,528 | |||||||||||
Bugae Dong, Incheon | 157,092 | — | (78,220 | ) | 78,872 | |||||||||||
Sungsu dong, Seoul (factory building) | — | 64,689 | (212 | ) | 64,477 | |||||||||||
Total | 221,207 | 64,689 | (129,019 | ) | 156,877 | |||||||||||
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25. | OPERATING EXPENSES |
2006 | 2007 | 2008 | ||||||||||
Salaries and wages | 2,224,598 | 2,242,295 | 2,281,587 | |||||||||
Share-based payment | 531 | 1,251 | 1,922 | |||||||||
Provision for severance indemnities | 240,843 | 360,476 | 362,342 | |||||||||
Employee welfare | 527,062 | 528,902 | 567,878 | |||||||||
Travel | 42,057 | 38,568 | 31,725 | |||||||||
Communications | 65,825 | 76,983 | 58,981 | |||||||||
Electric and water charges | 227,262 | 245,231 | 248,848 | |||||||||
Taxes and dues | 197,196 | 195,874 | 200,287 | |||||||||
Supplies | 37,199 | 37,765 | 37,541 | |||||||||
Publications | 5,773 | 6,281 | 5,215 | |||||||||
Rent | 219,825 | 226,327 | 249,827 | |||||||||
Depreciation | 3,185,193 | 3,193,591 | 3,214,325 | |||||||||
Amortization | 371,616 | 408,611 | 415,393 | |||||||||
Repairs | 414,428 | 288,715 | 207,332 | |||||||||
Maintenance | 290,590 | 322,364 | 373,006 | |||||||||
Automobile maintenance | 29,307 | 30,637 | 20,337 | |||||||||
Insurance | 20,496 | 23,157 | 30,003 | |||||||||
Commissions | 1,042,180 | 1,147,640 | 1,489,471 | |||||||||
Advertising | 232,202 | 274,450 | 221,779 | |||||||||
Education and training | 39,092 | 31,331 | 29,432 | |||||||||
Praise and reward | 10,894 | 11,168 | 12,707 | |||||||||
Research | 225,321 | 238,722 | 235,508 | |||||||||
Development | 56,424 | 52,288 | 47,639 | |||||||||
Interconnection charges | 1,177,896 | 1,200,373 | 1,234,474 | |||||||||
Cost of services | 606,440 | 776,782 | 525,527 | |||||||||
International settlement payment | 203,339 | 216,962 | 263,464 | |||||||||
Cost of goods sold | 1,682,009 | 1,911,897 | 2,367,211 | |||||||||
Promotion | 561,186 | 749,029 | 1,079,580 | |||||||||
Sales commission | 1,348,156 | 1,902,106 | 2,129,674 | |||||||||
Provision for doubtful accounts | 111,285 | 71,502 | 150,583 | |||||||||
Other | 99,009 | 145,747 | 163,380 | |||||||||
Sub-total | 15,495,234 | 16,957,025 | 18,256,978 | |||||||||
Less : transfer to other accounts | (53,730 | ) | (42,284 | ) | (40,197 | ) | ||||||
15,441,504 | 16,914,741 | 18,216,781 | ||||||||||
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26. | INCOME TAX EXPENSE |
2006 | 2007 | 2008 | ||||||||||
Current income tax expense (including additional income taxes and tax refunds) | 399,097 | 402,254 | 294,620 | |||||||||
Changes in deferred income tax assets and liabilities related to temporary differences (including tax loss and credits carryforwards) (Note) | 77,275 | (45,506 | ) | (126,811 | ) | |||||||
Income tax expense directly reflected in stockholders’ equity | (247 | ) | 51 | 50 | ||||||||
Income tax expense | 476,125 | 356,799 | 167,859 | |||||||||
(Note) | Changes in deferred income tax assets and liabilities related to temporary differences (in millions of Korean won): |
2007 | 2008 | |||||||
Ending deferred income tax assets | 349,058 | 482,721 | ||||||
Beginning deferred income tax assets | (305,856 | ) | (349,058 | ) | ||||
Changes in deferred income tax assets (liabilities) directly added to (deducted from) stockholders’ equity | 2,304 | (3,000 | ) | |||||
Other | — | (3,852 | ) | |||||
Changes in deferred income tax assets | 45,506 | 126,811 | ||||||
2006 | 2007 | 2008 | ||||||||||
Income from continuing operations before income tax expense | 1,985,846 | 1,447,763 | 681,149 | |||||||||
Income tax expense at statutory income tax rate (For 2006 and 2007: Less than | 546,108 | 398,123 | 187,285 | |||||||||
Differences (Note) | (69,983 | ) | (41,324 | ) | (19,426 | ) | ||||||
Income tax expense on continuing operations | 476,125 | 356,799 | 167,859 | |||||||||
Effective tax rates | 23.98 | % | 24.64 | % | 24.64 | % | ||||||
(Note) Differences: | ||||||||||||
Non-temporary difference | 79,895 | 18,704 | 25,412 | |||||||||
Changes in deferred income tax assets (liabilities) unrecognized related to equity method investment securities | 24,918 | 37,987 | 91,072 | |||||||||
Tax credit | (160,875 | ) | (121,159 | ) | (203,070 | ) | ||||||
Additional income tax and tax refund for prior years | (13,921 | ) | 30,545 | (4,377 | ) | |||||||
Tax rate changes | — | — | 72,839 | |||||||||
Other | — | (7,401 | ) | (1,302 | ) | |||||||
(69,983 | ) | (41,324 | ) | (19,426 | ) | |||||||
F-74
Table of Contents
2007 | ||||||||||||||||||||||||||||
Final Tax Return | Deferred Income Tax Assets | |||||||||||||||||||||||||||
Amount | December 31, | (Liabilities) | ||||||||||||||||||||||||||
January 1, 2007 | (Note 1) | Increase | Decrease | 2007 | Current | Non-Current | ||||||||||||||||||||||
(Deductible temporary differences) | ||||||||||||||||||||||||||||
Allowance for doubtful accounts | 490,318 | 419,703 | — | (61,625 | ) | 358,078 | 92,990 | 5,480 | ||||||||||||||||||||
Inventories | 42,972 | 42,256 | — | (7,277 | ) | 34,979 | 9,619 | — | ||||||||||||||||||||
Derivative instruments | 158,962 | 158,746 | 5,975 | — | 164,721 | 45,298 | — | |||||||||||||||||||||
Available-for-sale securities | 18,941 | 19,009 | — | (5,727 | ) | 13,282 | — | 3,653 | ||||||||||||||||||||
Equity method investment securities | 1,301,777 | 1,301,777 | 118,542 | (19,496 | ) | 1,400,823 | — | 385,226 | ||||||||||||||||||||
Contribution for construction | 176,404 | 176,404 | 29,204 | — | 205,608 | — | 56,542 | |||||||||||||||||||||
Accrued expenses | 238,753 | 246,775 | 51,146 | — | 297,921 | 81,928 | — | |||||||||||||||||||||
Provisions | 102,768 | 113,234 | — | (29,315 | ) | 83,919 | 19,275 | 3,802 | ||||||||||||||||||||
Provision for severance indemnities | 772,554 | 775,962 | 232,432 | — | 1,008,394 | — | 277,309 | |||||||||||||||||||||
Refundable deposits for telephone installation | 56,851 | 56,851 | — | (2,851 | ) | 54,000 | — | 14,850 | ||||||||||||||||||||
Other | 19,173 | 111,793 | 37,789 | — | 149,582 | (19,583 | ) | 60,720 | ||||||||||||||||||||
Sub total | 3,379,473 | 3,422,510 | 475,088 | (126,291 | ) | 3,771,307 | 229,527 | 807,582 | ||||||||||||||||||||
Not recognized as deferred income tax assets (Note 2) | (1,417,575 | ) | (1,559,920 | ) | (3,320 | ) | (425,659 | ) | ||||||||||||||||||||
Recognized as deferred income tax assets | 1,961,898 | 2,211,387 | 226,207 | 381,923 | ||||||||||||||||||||||||
Tax rate (Note 3) | 27.5 | % | 27.5 | % | ||||||||||||||||||||||||
Deferred income tax assets | 539,522 | 608,130 | 226,207 | 381,923 | ||||||||||||||||||||||||
F-75
Table of Contents
2007 | ||||||||||||||||||||||||||||
Final Tax | ||||||||||||||||||||||||||||
Return | Deferred Income Tax Assets | |||||||||||||||||||||||||||
January 1, | Amount | December 31, | (Liabilities) | |||||||||||||||||||||||||
2007 | (Note 1) | Increase | Decrease | 2007 | Current | Non-Current | ||||||||||||||||||||||
(Taxable temporary differences) | ||||||||||||||||||||||||||||
Accrued interest income | (5,305 | ) | (5,589 | ) | (527 | ) | — | (6,116 | ) | (1,682 | ) | — | ||||||||||||||||
Equity method investment securities | (82,043 | ) | (82,043 | ) | (40,026 | ) | — | (122,069 | ) | — | (33,569 | ) | ||||||||||||||||
Depreciation | (96,013 | ) | (98,339 | ) | — | 60,105 | (38,234 | ) | — | (10,515 | ) | |||||||||||||||||
Deposits for severance indemnities | (746,828 | ) | (749,807 | ) | (220,946 | ) | — | (970,753 | ) | — | (266,956 | ) | ||||||||||||||||
Derivatives instruments | — | — | (2,792 | ) | — | (2,792 | ) | — | (768 | ) | ||||||||||||||||||
Reserve for technology and human resource development | (320,000 | ) | (320,000 | ) | — | 106,667 | (213,333 | ) | — | (58,667 | ) | |||||||||||||||||
Sub total | (1,250,189 | ) | (1,255,778 | ) | (264,291 | ) | 166,772 | (1,353,297 | ) | (1,682 | ) | (370,475 | ) | |||||||||||||||
Not recognized as deferred income tax liabilities (Note 2) | 82,043 | 122,069 | — | 33,569 | ||||||||||||||||||||||||
Recognized as deferred income tax liabilities | (1,168,146 | ) | (1,231,228 | ) | (1,682 | ) | (336,906 | ) | ||||||||||||||||||||
Tax rate (Note 3) | 27.5 | % | 27.5 | % | ||||||||||||||||||||||||
Deferred income tax liabilities | (321,240 | ) | (338,588 | ) | (1,682 | ) | (336,906 | ) | ||||||||||||||||||||
(Tax loss carryforwards) | ||||||||||||||||||||||||||||
Total loss carryforwards | 70,143 | 67,377 | — | 18,529 | ||||||||||||||||||||||||
Not recognized as deferred income tax assets (Note 4) | — | (38,428 | ) | — | (10,568 | ) | ||||||||||||||||||||||
Recognized as deferred income tax assets | 70,143 | 28,949 | — | 7,961 | ||||||||||||||||||||||||
Tax rate (Note 3) | 27.5 | % | 27.5 | % | ||||||||||||||||||||||||
Deferred income tax assets | 19,289 | 7,961 | — | 7,961 | ||||||||||||||||||||||||
(Tax credit carryforwards) | ||||||||||||||||||||||||||||
Total tax credit | 101,695 | 111,456 | — | 111,456 | ||||||||||||||||||||||||
Not recognized as deferred income tax assets | (16,905 | ) | (22,991 | ) | — | (22,991 | ) | |||||||||||||||||||||
Recognized as deferred income tax assets | 84,790 | 88,465 | 35,000 | 36,555 | ||||||||||||||||||||||||
Deferred income tax assets | 68,285 | 71,555 | 35,000 | 36,555 | ||||||||||||||||||||||||
Deferred income tax assets, net | 305,856 | 349,058 | 259,525 | 89,533 | ||||||||||||||||||||||||
F-76
Table of Contents
2008 | ||||||||||||||||||||||||||||
Final Tax Return | Deferred Income Tax Assets | |||||||||||||||||||||||||||
Amount | December 31, | (Liabilities) | ||||||||||||||||||||||||||
January 1, 2008 | (Note 1) | Increase | Decrease | 2008 | Current | Non-Current | ||||||||||||||||||||||
(Deductible temporary differences) | ||||||||||||||||||||||||||||
Allowance for doubtful accounts | 358,078 | 457,474 | 253,716 | (213,518 | ) | 497,672 | 113,861 | 5,994 | ||||||||||||||||||||
Inventories | 34,979 | 137,182 | 20,435 | (137,225 | ) | 20,392 | 628 | 3,915 | ||||||||||||||||||||
Derivative instruments | 164,721 | 38,474 | 11,729 | (22,701 | ) | 27,502 | 6,655 | — | ||||||||||||||||||||
Available-for-sale securities | 13,282 | 24,462 | 15,105 | (230 | ) | 39,337 | — | 8,840 | ||||||||||||||||||||
Equity method investment securities | 1,400,823 | 1,532,097 | 239,810 | (7,022 | ) | 1,764,885 | — | 388,275 | ||||||||||||||||||||
Contribution for construction | 205,608 | 205,610 | 27,496 | — | 233,106 | — | 51,283 | |||||||||||||||||||||
Accrued expenses | 297,921 | 149,058 | 212,483 | (138,951 | ) | 222,590 | 53,825 | — | ||||||||||||||||||||
Provisions | 83,919 | 88,036 | 139,193 | (44,673 | ) | 182,556 | 35,845 | 7,577 | ||||||||||||||||||||
Provision for severance indemnities | 1,008,394 | 1,019,900 | 151,580 | (19,177 | ) | 1,152,303 | — | 253,508 | ||||||||||||||||||||
Refundable deposits for telephone installation | 54,000 | 54,000 | — | (3,068 | ) | 50,932 | — | 11,205 | ||||||||||||||||||||
Other | 149,582 | 275,449 | 983,596 | (118,633 | ) | 1,140,412 | 56,751 | 199,485 | ||||||||||||||||||||
Sub total | 3,771,307 | 3,981,742 | 2,055,143 | (705,198 | ) | 5,331,687 | 267,565 | 930,082 | ||||||||||||||||||||
Not recognized as deferred income tax assets (Note 2) | (1,559,920 | ) | (1,861,675 | ) | (16,330 | ) | (395,012 | ) | ||||||||||||||||||||
Recognized as deferred income tax assets | 2,211,387 | 3,470,012 | 251,235 | 535,070 | ||||||||||||||||||||||||
Tax rate (Note 3) | 27.5 | % | 24.2%, 22% | |||||||||||||||||||||||||
Deferred income tax assets | 608,130 | 786,305 | 251,235 | 535,070 | ||||||||||||||||||||||||
F-77
Table of Contents
2008 | ||||||||||||||||||||||||||||
Final Tax | ||||||||||||||||||||||||||||
Return | Deferred Income Tax Assets | |||||||||||||||||||||||||||
January 1, | Amount | December 31, | (Liabilities) | |||||||||||||||||||||||||
2008 | (Note 1) | Increase | Decrease | 2008 | Current | Non-Current | ||||||||||||||||||||||
(Taxable temporary differences) | ||||||||||||||||||||||||||||
Accrued interest income | (6,116 | ) | (8,750 | ) | (5,959 | ) | 3,057 | (11,652 | ) | (2,674 | ) | (124 | ) | |||||||||||||||
Equity method investment securities | (122,069 | ) | (229,851 | ) | (82,002 | ) | 2,517 | (309,336 | ) | — | (68,055 | ) | ||||||||||||||||
Depreciation | (38,234 | ) | (31,906 | ) | — | 8,311 | (23,595 | ) | — | (5,191 | ) | |||||||||||||||||
Deposits for severance indemnities | (970,753 | ) | (980,981 | ) | (136,824 | ) | 5,959 | (1,111,846 | ) | — | (244,640 | ) | ||||||||||||||||
Derivative instruments | (2,792 | ) | (9,126 | ) | (497,413 | ) | 22 | (506,517 | ) | (40,974 | ) | (74,184 | ) | |||||||||||||||
Reserve for technology and human resource development | (213,333 | ) | (213,333 | ) | — | 106,666 | (106,667 | ) | (25,813 | ) | — | |||||||||||||||||
Sub total | (1,353,297 | ) | (1,473,947 | ) | (722,198 | ) | 126,532 | (2,069,613 | ) | (69,461 | ) | (392,194 | ) | |||||||||||||||
Not recognized as deferred income tax liabilities (Note 2) | 122,069 | 119,892 | — | 26,377 | ||||||||||||||||||||||||
Recognized as deferred income tax liabilities | (1,231,228 | ) | (1,949,721 | ) | (69,461 | ) | (365,817 | ) | ||||||||||||||||||||
Tax rate (Note 3) | 27.5 | % | 24.2%, 22% | |||||||||||||||||||||||||
Deferred income tax liabilities | (338,588 | ) | (435,278 | ) | (69,461 | ) | (365,817 | ) | ||||||||||||||||||||
(Tax loss carryforwards) | ||||||||||||||||||||||||||||
Total loss carryforwards | 67,377 | 223,560 | — | 49,183 | ||||||||||||||||||||||||
Not recognized as deferred income tax assets (Note 4) | (38,428 | ) | (220,869 | ) | — | (48,591 | ) | |||||||||||||||||||||
Recognized as deferred income tax assets | 28,949 | 2,691 | — | 592 | ||||||||||||||||||||||||
Tax rate (Note 3) | 27.5 | % | 24.2%, 22% | |||||||||||||||||||||||||
Deferred income tax assets | 7,961 | 592 | — | 592 | ||||||||||||||||||||||||
(Tax credit carryforwards) | ||||||||||||||||||||||||||||
Total tax credit | 111,456 | 153,193 | 75,116 | 78,077 | ||||||||||||||||||||||||
Not recognized as deferred income tax assets | (22,991 | ) | (22,091 | ) | (6,949 | ) | (15,142 | ) | ||||||||||||||||||||
Recognized as deferred income tax assets | 88,465 | 131,102 | 68,167 | 62,935 | ||||||||||||||||||||||||
Deferred income tax assets | 71,555 | 131,102 | 68,167 | 62,935 | ||||||||||||||||||||||||
Deferred income tax assets, net | 349,058 | 482,721 | 249,941 | 232,780 | ||||||||||||||||||||||||
(Note 1) | Tax effects fromtrue-up for prior year tax return arising from temporary difference and non-temporary differences were adjusted in deferred income tax assets and current earnings, respectively. Changes in temporary difference resulting from tax investigation in the current period were adjusted in final tax return amount. | |
(Note 2) | The Company did not recognize deferred income tax assets of | |
(Note 3) | Tax rate is the enacted marginal tax rate which is expected to apply to taxable income in the periods in which the deferred income tax liability or asset is expected to be settled or realized. | |
(Note 4) | Certain subsidiaries including TSC did not recognize deferred income tax assets amounting to |
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in excess of taxable differences and future taxable income. Meanwhile, the tax loss carryforwards will be expired through 2013. |
2007 | 2008 | |||||||||||||||
Deferred Income | Deferred Income | |||||||||||||||
Income Tax | Tax Assets | Income Tax | Tax Assets | |||||||||||||
Expense | (Liabilities) | Expense | (Liabilities) | |||||||||||||
Gain on disposal of treasury stock (capital surplus) | (196 | ) | — | (144 | ) | — | ||||||||||
Other capital adjustment | — | (5,956 | ) | — | (4,147 | ) | ||||||||||
Gain on translation of foreign operations | — | — | — | — | ||||||||||||
Loss on translation of foreign operations | — | 5,005 | — | 1,373 | ||||||||||||
Gain on valuation of available-for-sale securities | — | (3,218 | ) | — | (230 | ) | ||||||||||
Loss on valuation of available-for-sale securities | — | — | — | 1,872 | ||||||||||||
Gain on valuation of derivatives for cash flow hedge | — | (768 | ) | — | (3,056 | ) | ||||||||||
Loss on valuation of derivatives for cash flow hedge | — | — | — | 4,989 | ||||||||||||
Increase in equity of associates | — | (3,791 | ) | — | (12 | ) | ||||||||||
Decrease in equity of associates | — | 7,688 | — | 1,171 | ||||||||||||
Total | (196 | ) | (1,040 | ) | (144 | ) | 1,960 | |||||||||
27. | INCOME FROM DISCONTINUING OPERATIONS |
2006 | 2007 | |||||||||||||||||||||||
Fund No. 1 | KTPI | Total | Fund No. 1 | KTPI | Total | |||||||||||||||||||
Operating and non-operating income (loss) from discontinuing operations | (1,945 | ) | 1,941 | (4 | ) | 388 | (38,727 | ) | (38,339 | ) | ||||||||||||||
Reversal of cumulative loss from discontinuing operations (Note 1) | — | — | — | — | 112,543 | 112,543 | ||||||||||||||||||
Income (loss) from discontinuing operations (Note 2) | (1,945 | ) | 1,941 | (4 | ) | 388 | 73,816 | 74,204 | ||||||||||||||||
(Note 1) | Since future outflows of economic resources from the cumulative loss totaling |
(Note 2) | There were no tax effects for income (loss) from discontinuing operations. |
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28. | INCOME PER SHARE |
a. | Basic Income Per Share From Continuing Operations |
2006 | 2007 | 2008 | ||||||||||
Net income from continuing operations | 1,291,515 | 982,093 | 449,810 | |||||||||
Weighted average number of common stock outstanding | 209,894,649 | 206,599,294 | 202,891,015 | |||||||||
Basic income per share from continuing operations (in Korean won) | 6,153 | 4,754 | 2,217 | |||||||||
b. | Basic Income Per Share From Discontinuing Operations |
2006 | 2007 | 2008 | ||||||||||
Net income from discontinuing operations | 348 | 74,134 | — | |||||||||
Weighted average number of common stock outstanding | 209,894,649 | 206,599,294 | 202,891,015 | |||||||||
Basic income per share from discontinuing operations (in Korean won) | 2 | 358 | — | |||||||||
c. | Basic Net Income Per Share |
2006 | 2007 | 2008 | ||||||||||
Net income | 1,291,863 | 1,056,227 | 449,810 | |||||||||
Weighted average number of common stock outstanding | 209,894,649 | 206,599,294 | 202,891,015 | |||||||||
Basic net income per share (in Korean won) | 6,155 | 5,112 | 2,217 | |||||||||
d. | Diluted Income Per Share From Continuing Operations |
2006 | 2007 | 2008 | ||||||||||
Net income from continuing operations | 1,291,515 | 982,093 | 449,810 | |||||||||
Interest on exchangeable bonds | 52 | — | — | |||||||||
Adjusted income from continuing operations | 1,291,567 | 982,093 | 449,810 | |||||||||
Weighted average number of common stock outstanding | 209,894,649 | 206,599,294 | 202,891,015 | |||||||||
Number of shares with dilutive effects | 254,949 | — | — | |||||||||
Diluted income per share from continuing operations (in Korean won) | 6,146 | 4,754 | 2,217 | |||||||||
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e. | Diluted Income Per Share From Discontinuing Operations |
2006 | 2007 | 2008 | ||||||||||
Net income from discontinuing operations | 348 | 74,134 | — | |||||||||
Adjusted income from discontinuing operations | 348 | 74,134 | — | |||||||||
Weighted average number of common stock outstanding | 209,894,649 | 206,599,294 | 202,891,015 | |||||||||
Number of shares with dilutive effects | 254,949 | — | — | |||||||||
Diluted income (loss) per share from discontinuing operations (in Korean won) | 2 | 358 | — | |||||||||
f. | Diluted Net Income Per Share |
2006 | 2007 | 2008 | ||||||||||
Net income | 1,291,863 | 1,056,227 | 449,810 | |||||||||
Interest on exchangeable bonds | 52 | — | — | |||||||||
Adjusted net income | 1,291,915 | 1,056,227 | 449,810 | |||||||||
Weighted average number of common stock outstanding | 209,894,649 | 206,599,294 | 202,891,015 | |||||||||
Number of shares with dilutive effects | 254,949 | — | — | |||||||||
Diluted net income per share (in Korean won) | 6,148 | 5,112 | 2,217 | |||||||||
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Common Shares to be Issued | ||||||||||||||||
Par Value | Issue Date | Maturity Date | Exercisable Period | 2007 | 2008 | |||||||||||
Stock option | (Note 1) | December 26, 2002 | December 26, 2009 | Increase in the number of exercisable shares by 1/3 every year after two years from grant date | 371,632 | 371,632 | ||||||||||
Stock option | (Note 2) | September 16, 2003 | September 16, 2010 | From 2 years after grant date till maturity date | 3,000 | 3,000 | ||||||||||
Stock option | (Note 3) | February 4, 2005 | February 4, 2012 | Increase in the number of exercisable shares by 1/3 every year after two years from grant date | 43,153 | 43,153 | ||||||||||
Other share-based payments | (Note 4) | March 29, 2007 | March 27, 2008 | On maturity date, subject to the resolution of board of directors | 23,925 | — | ||||||||||
Other share-based payments | (Note 4) | March 27, 2008 | March 27, 2009 | On maturity date, subject to the resolution of board of directors | — | 29,481 | ||||||||||
Total | 441,710 | 447,266 | ||||||||||||||
29. | INSURANCE |
Risk Covered | Coverage | |||||
Finance lease receivables | Movables package | 219,740 | ||||
Inventories | Theft and fire | 70,000 | ||||
Buildings | Fire and other | 1,404,341 | ||||
Structures | Property package | 59,728 | ||||
Machinery | Property package and other | 1,400,511 | ||||
Vessel (vehicles) | Vessel and other | 68,094 | ||||
Others | Fire and other | 138,352 | ||||
Total | 3,360,766 | |||||
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30. | DIVIDENDS |
a. | Dividends |
2006 | 2007 | 2008 | ||||||||||
Dividends per share (dividend ratio) | 2,000 (40 | %) | 2,000 (40 | %) | 1,120 (22.4 | %) | ||||||
Number of shares outstanding (Note) | 208,095,178 | 203,686,823 | 202,035,296 | |||||||||
Dividends | 416,190,356,000 | 407,373,646,000 | 226,279,531,520 | |||||||||
(Note) | 71,532,222 shares, 71,515,577 shares and 71,500,404 shares of treasury stock as of December 31, 2006, 2007 and 2008, respectively, are excluded. |
b. | Dividend Payout Ratios |
2006 | 2007 | 2008 | ||||||||||
Dividends | 416,190,356,000 | 407,373,646,000 | 226,279,531,520 | |||||||||
Net income (Attributable to equity holders of the parent) | 1,291,863,401,102 | 1,056,227,165,634 | 449,809,735,316 | |||||||||
Payout ratio | 32.22 | % | 38.57 | % | 50.31 | % | ||||||
c. | Dividend Yield Ratios |
2006 | 2007 | 2008 | ||||||||||
Dividends per share | 2,000 | 2,000 | 1,120 | |||||||||
Stock price at the end of the year | 46,500 | 48,900 | 37,500 | |||||||||
Dividend yield ratio | 4.30 | % | 4.09 | % | 2.99 | % | ||||||
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31. | STATEMENTS OF CASH FLOWS |
2006 | 2007 | 2008 | ||||||||||
Construction in progress transferred to property and equipment and other accounts | 3,291,167 | 3,122,246 | 3,080,337 | |||||||||
Conversion of convertible notes | 14,812 | — | — | |||||||||
Transferred to newly included subsidiary’s net income or loss before acquisition: | ||||||||||||
Share-based payment | — | 12 | — | |||||||||
Provision for severance indemnities | — | 1,003 | — | |||||||||
Depreciation | — | 2,010 | — | |||||||||
Amortization | — | 431 | — | |||||||||
Bad debt | — | 1,712 | — | |||||||||
Foreign currency translation gains | — | 92 | — | |||||||||
Gain on disposal of property and equipment | — | 77 | — | |||||||||
Gain on disposal of available-for-sale securities | — | 185 | — | |||||||||
Gain on disposal of trading securities | — | 42 | — | |||||||||
Equity in income of associates | — | 35 | — | |||||||||
Other bad debt | — | 934 | — | |||||||||
Loss on disposal of available-for-sale securities | — | 225 | — | |||||||||
Equity in loss of associates | — | 2,139 | — | |||||||||
Loss on disposal of property | — | 171 | — | |||||||||
Impairment loss on investment assets | — | 6,716 | — | |||||||||
Impairment loss on intangible assets | — | 221 | — |
32. | COMMITMENTS AND CONTINGENCIES |
a. | Legal Matters |
b. | Commitments with Financial Institutions |
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Commitment | Amount | Related Companies | ||||
Bank overdraft | 1,071,000 | KT, KTF, KTR, TSC, KT Capital and KTDS | ||||
Commercial paper issuance | 248,000 | KT, TSC and KT Capital | ||||
Collateralized loan on accounts receivable — trade | 615,000 | KT and KTDS | ||||
Note discount | 10,000 | KTL | ||||
Local credit agreements | 910,000 | KTF | ||||
Corporate bonds | 20,000 | TSC | ||||
General loans | 5,000 | TSC | ||||
Letters of credit | USD 106,638 | KT, KTSC, KTR and KT Capital | ||||
Working capital loans | USD 2,000 | KTSC | ||||
Collection for foreign currency denominated checks | USD 1,000 | KT | ||||
Guarantee agreements in foreign currency | USD 75 | KTSC | ||||
Total | 2,879,000 | |||||
USD 109,713 | ||||||
Guarantee | Financial institution | Limit | Used Amount | Related Companies | ||||||||
Performance guarantee | Korea Eximbank | USD 2,175 | USD 2,175 | KT | ||||||||
for construction | Korea Eximbank | SAR 735 | SAR 735 | KT | ||||||||
Korea Software Financial Cooperative and others | 271,930 | 271,930 | KT, KTN, KTSC, KT Capital, Nasmedia, KT FDS and KTF M Hows | |||||||||
General guarantee | Korea Exchange Bank | USD 1,000 | USD 30 | KT | ||||||||
Korea Exchange Bank and Korea Eximbank | 1,513 | 1,413 | KT and KTN | |||||||||
Foreign currency guarantee for International financing | Kookmin Bank | USD 25,000 | USD 25,000 | KT | ||||||||
Foreign currency payment guarantee | Kookmin Bank | USD 7,735 | USD 7,735 | KT | ||||||||
Warranty performance guarantee agreements | Seoul Guarantee Insurance | 3,689 | 3,689 | KT, KT FDS, KTF M Hows and Nasmedia | ||||||||
c. | Stockholders’ Agreement between KT and NTT DoCoMo |
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d. | Put and Call Combination Contract with Woori Investment & Securities Co., Ltd. |
e. | Payment of a Handset Subsidy to PCS or WiBro Users |
33. | DERIVATIVES |
Type of Transaction | Financial Institution | Description | ||
Interest rate swap | Merrill Lynch and others | Exchange fixed interest rate for variable interest rate for a specified period | ||
Currency swap | Merrill Lynch and others | Exchange foreign currency cash flow for local currency cash flow local currency cash flow for a specified period | ||
Combined interest rate currency swap | Merrill Lynch and others | Exchange foreign currency fixed (variable) swaps interest rate for local currency variable (fixed) interest | ||
Currency forward | Kookmin Bank and others | Exchange a specified currency at the agreed exchange rate at a specified date | ||
Put Option | PT. Mobile-8 | A contract giving the right to sell an underlying security at a specified price |
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2007 | ||||||||||||||||
Fair Value | ||||||||||||||||
Assets | Assets | Liabilities | ||||||||||||||
Type of Transaction | Contract Amount | (Current) | (Non-Current) | (Current) | ||||||||||||
Interest rate swap | 486,540 USD 100,000 | 493 | — | 3,944 | ||||||||||||
Currency swap (Note) | USD 220,000 | — | 1,710 | 2,833 | ||||||||||||
Combined interest rate currency swap | USD 715,165 | 105 | — | 125,548 | ||||||||||||
Currency forward | JPY 325,000 | 98 | — | — | ||||||||||||
Put Option | — | — | 1,971 | — | ||||||||||||
486,540 | ||||||||||||||||
USD 1,035,165 | ||||||||||||||||
Total | JPY 325,000 | 696 | 3,681 | 132,325 | ||||||||||||
2008 | ||||||||||||||||||||
Fair Value | ||||||||||||||||||||
Assets | Assets | Liabilities | Liabilities | |||||||||||||||||
Type of Transaction | Contract Amount | (Current) | (Non-Current) | (Current) | (Non-Current) | |||||||||||||||
Interest rate swap | 307,240 USD 100,000 | — | — | 13,610 | 2,031 | |||||||||||||||
Currency swap (Note) | USD 220,000 | 14,793 | 57,334 | — | — | |||||||||||||||
Combined interest rate currency swap (Note) | USD 1,430,000 | |||||||||||||||||||
JPY 19,500,000 | 172,376 | 245,355 | — | — | ||||||||||||||||
Currency forward | USD 35,201 | |||||||||||||||||||
JPY 20,000 | — | — | 9 | 4,746 | ||||||||||||||||
Put Option | — | 14,540 | — | — | — | |||||||||||||||
307,240 | ||||||||||||||||||||
USD 1,785,201 | ||||||||||||||||||||
Total | JPY 19,520,000 | 201,709 | 302,689 | 13,619 | 6,777 | |||||||||||||||
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Fair Value — Assets | ||||||||||||||||
Contract | (Non-Current) | |||||||||||||||
Type of Transaction | Contract Date | Maturity Date | Amount | 2007 | 2008 | |||||||||||
Currency swap | April 4, 2007 | April 11, 2012 | USD 150,000 | 1,710 | 57,046 | |||||||||||
(Notes 1 and 2) | October 6, 2008 | April 11, 2012 | USD 50,000 | — | 288 | |||||||||||
Combined interest | January 4, 2008 | January 11, 2011 | JPY 12,500,000 | — | 62,636 | |||||||||||
rate currency swap | February 12, 2008 | February 25, 2011 | USD 70,000 | — | 20,210 | |||||||||||
(Note 2) | February 13, 2008 | February 25, 2011 | USD 35,000 | — | 10,066 | |||||||||||
February 13, 2008 | February 25, 2011 | USD 30,000 | — | 8,500 | ||||||||||||
February 14, 2008 | February 25, 2011 | USD 20,000 | — | 5,831 | ||||||||||||
February 14, 2008 | February 25, 2011 | USD 20,000 | — | 5,893 | ||||||||||||
March 3, 2008 | December 13, 2010 | USD 70,000 | — | 20,744 | ||||||||||||
March 20, 2008 | March 31, 2011 | USD 50,000 | — | 11,917 | ||||||||||||
March 20, 2008 | March 31, 2012 | USD 110,000 | — | 27,043 | ||||||||||||
April 18, 2008 | April 28, 2011 | JPY 4,000,000 | — | 15,914 | ||||||||||||
April 21, 2008 | April 28, 2011 | JPY 3,000,000 | — | 12,370 | ||||||||||||
June 11, 2008 | June 20, 2011 | USD 50,000 | — | 8,790 | ||||||||||||
June 11, 2008 | June 20, 2011 | USD 15,000 | — | 2,666 | ||||||||||||
June 13, 2008 | June 20, 2011 | USD 30,000 | — | 4,807 | ||||||||||||
July 1, 2008 | April 2, 2011 | USD 30,000 | — | 5,181 | ||||||||||||
September 2, 2008 | September 11, 2013 | USD 200,000 | — | 22,787 | ||||||||||||
USD 930,000 | ||||||||||||||||
Total | JPY 19,500,000 | 1,710 | 302,689 | |||||||||||||
(Note 1) | Among financial institutions with which the Company entered into foreign currency swap contracts totaling USD 200 million in 2007, Lehman Brothers Holdings, Inc. (“Lehman”) filed for Chapter 11 bankruptcy with the United States Bankruptcy Court during the third quarter of 2008. Lehman’s bankruptcy filing caused the Company to discontinue its cash flow hedge accounting for foreign exchange swap contracts with Lehman totaling USD 50 million and accordingly the related derivative asset balance amounting to |
(Note 2) | Above foreign currency swap contracts are to hedge the risk of variability in future cash flows from foreign currency bonds and as of December 31, 2008, the gain and loss on valuation of the swap contract amounting to |
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2006 | ||||||||||||||||||||||||
Valuation Gain | Valuation Loss | |||||||||||||||||||||||
For | For | For | For | |||||||||||||||||||||
Type of Transaction | Trading | Hedging | Total | Trading | Hedging | Total | ||||||||||||||||||
Interest rate swap | 8,654 | — | 8,654 | 1,435 | — | 1,435 | ||||||||||||||||||
Currency swap | — | — | — | 4,855 | — | 4,855 | ||||||||||||||||||
Combined interest rate currency swap | — | — | — | 80,412 | — | 80,412 | ||||||||||||||||||
Currency futures | — | — | — | 13 | — | 13 | ||||||||||||||||||
Total | 8,654 | — | 8,654 | 86,715 | — | 86,715 | ||||||||||||||||||
2007 | ||||||||||||||||||||||||||||
Valuation | ||||||||||||||||||||||||||||
Gain | ||||||||||||||||||||||||||||
Valuation Gain | Valuation Loss | (Note 2) | ||||||||||||||||||||||||||
For | For | For | For | For | ||||||||||||||||||||||||
Type of Transaction | Trading | Hedging | Total | Trading | Hedging | Total | Hedging | |||||||||||||||||||||
Interest rate swap | 1,973 | — | 1,973 | 10,823 | — | 10,823 | — | |||||||||||||||||||||
Currency swap | — | 2,280 | 2,280 | 4,719 | — | 4,719 | 2,792 | |||||||||||||||||||||
Combined interest rate currency swap | 35,313 | — | 35,313 | — | — | — | — | |||||||||||||||||||||
Currency forwards | 98 | — | 98 | — | — | — | — | |||||||||||||||||||||
Put Option | 476 | — | 476 | — | — | — | — | |||||||||||||||||||||
Total | 37,860 | 2,280 | 40,140 | 15,542 | — | 15,542 | 2,792 | |||||||||||||||||||||
2008 | ||||||||||||||||||||||||||||
Valuation | ||||||||||||||||||||||||||||
Gain | ||||||||||||||||||||||||||||
Valuation Gain | Valuation Loss (Note 1) | (Note 2) | ||||||||||||||||||||||||||
For | For | For | For | For | ||||||||||||||||||||||||
Type of Transaction | Trading | Hedging | Total | Trading | Hedging | Total | Hedging | |||||||||||||||||||||
Interest rate swap | — | — | — | 10,798 | — | 10,798 | — | |||||||||||||||||||||
Currency swap | 17,626 | 54,905 | 72,531 | — | 97 | 97 | 11,708 | |||||||||||||||||||||
Combined interest rate currency swap | 297,925 | 267,655 | 565,580 | — | — | — | (22,146 | ) | ||||||||||||||||||||
Currency forwards | — | — | — | 6,088 | — | 6,088 | — | |||||||||||||||||||||
Put Option | 12,569 | — | 12,569 | — | — | — | — | |||||||||||||||||||||
Total | 328,120 | 322,560 | 650,680 | 16,886 | 97 | 16,983 | (10,438 | ) | ||||||||||||||||||||
(Note 1) | In accordance with the SKAS No. 24 “Preparation and Presentation of Financial Statements II (Financial Industry)”, the loss on valuation of currency forwards amounting to |
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(Note 2) | The amounts are before adjustment of deferred income tax, which shall be directly reflected to equity, and are included in equity. |
34. | SEGMENT INFORMATION |
2006 | ||||||||||||||||||||||||
Fixed-Line | ||||||||||||||||||||||||
Telecom | Consolidated | |||||||||||||||||||||||
Services | PCS Services | Other | Sub-Total | Elimination | Amount | |||||||||||||||||||
Total sales | 11,856,009 | 6,507,350 | 1,443,772 | 19,807,131 | (1,982,251 | ) | 17,824,880 | |||||||||||||||||
Internal sales | (506,655 | ) | (719,384 | ) | (756,212 | ) | (1,982,251 | ) | 1,982,251 | — | ||||||||||||||
Net sales | 11,349,354 | 5,787,966 | 687,560 | 17,824,880 | — | 17,824,880 | ||||||||||||||||||
Operating income | 1,756,228 | 668,747 | 54,274 | 2,479,249 | (95,873 | ) | 2,383,376 | |||||||||||||||||
Total assets | 17,962,333 | 8,068,028 | 1,648,946 | 27,679,307 | (3,435,973 | ) | 24,243,334 | |||||||||||||||||
2007 | ||||||||||||||||||||||||
Fixed-Line | ||||||||||||||||||||||||
Telecom | Consolidated | |||||||||||||||||||||||
Services | PCS Services | Other | Sub-Total | Elimination | Amount | |||||||||||||||||||
Total sales | 11,936,381 | 7,293,321 | 1,839,503 | 21,069,205 | (2,409,123 | ) | 18,660,082 | |||||||||||||||||
Internal sales | (491,440 | ) | (719,384 | ) | (1,198,299 | ) | (2,409,123 | ) | 2,409,123 | — | ||||||||||||||
Net sales | 11,444,941 | 6,573,937 | 641,204 | 18,660,082 | — | 18,660,082 | ||||||||||||||||||
Operating income | 1,433,722 | 440,900 | 74,173 | 1,948,795 | (203,454 | ) | 1,745,341 | |||||||||||||||||
Total assets | 17,950,064 | 7,460,705 | 2,382,708 | 27,793,477 | (3,666,592 | ) | 24,126,885 | |||||||||||||||||
2008 | ||||||||||||||||||||||||
Fixed-Line | ||||||||||||||||||||||||
Telecom | Consolidated | |||||||||||||||||||||||
Services | PCS Services | Other | Sub-Total | Elimination | Amount | |||||||||||||||||||
Total sales | 11,784,835 | 8,346,220 | 2,426,572 | 22,557,627 | (2,913,084 | ) | 19,644,543 | |||||||||||||||||
Internal sales | (538,965 | ) | (1,166,162 | ) | (1,207,957 | ) | (2,913,084 | ) | 2,913,084 | — | ||||||||||||||
Net sales | 11,245,870 | 7,180,058 | 1,218,615 | 19,644,543 | — | 19,644,543 | ||||||||||||||||||
Operating income | 1,113,389 | 454,381 | 23,823 | 1,591,593 | (163,831 | ) | 1,427,762 | |||||||||||||||||
Total assets | 18,684,922 | 8,056,122 | 3,179,646 | 29,920,690 | (3,782,086 | ) | 26,138,604 | |||||||||||||||||
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2007 | 2008 | |||||||||||||||||||||||
Consolidated | Consolidated | |||||||||||||||||||||||
Non-Financial | Financial | Amount | Non-Financial | Financial | Amount | |||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Current assets | ||||||||||||||||||||||||
Quick assets | 5,072,971 | 270,724 | 5,343,695 | 6,105,052 | 543,933 | 6,648,985 | ||||||||||||||||||
Inventories | 299,104 | — | 299,104 | 424,841 | — | 424,841 | ||||||||||||||||||
Sub-total | 5,372,075 | 270,724 | 5,642,799 | 6,529,893 | 543,933 | 7,073,826 | ||||||||||||||||||
Non-current assets | ||||||||||||||||||||||||
Investments | 458,048 | 12,147 | 470,195 | 510,807 | 35,193 | 546,000 | ||||||||||||||||||
Property and equipment | 15,211,550 | 76,452 | 15,288,002 | 15,142,938 | 45,693 | 15,188,631 | ||||||||||||||||||
Intangible assets | 1,735,295 | 28 | 1,735,323 | 1,474,099 | 139 | 1,474,238 | ||||||||||||||||||
Other | 727,044 | 263,522 | 990,566 | 1,342,091 | 513,818 | 1,855,909 | ||||||||||||||||||
Sub-total | 18,131,937 | 352,149 | 18,484,086 | 18,469,935 | 594,843 | 19,064,778 | ||||||||||||||||||
Total assets | 23,504,012 | 622,873 | 24,126,885 | 24,999,828 | 1,138,776 | 26,138,604 | ||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||
Current liabilities | 4,914,796 | 163,825 | 5,078,621 | 4,787,070 | 453,958 | 5,241,028 | ||||||||||||||||||
Non-current liabilities | 7,544,424 | 366,074 | 7,910,498 | 9,173,005 | 636,673 | 9,809,678 | ||||||||||||||||||
Total liabilities | 12,459,220 | 529,899 | 12,989,119 | 13,960,075 | 1,090,631 | 15,050,706 | ||||||||||||||||||
2007 | 2008 | |||||||||||||||||||||||
Consolidated | Consolidated | |||||||||||||||||||||||
Non-Financial | Financial | Amount | Non-Financial | Financial | Amount | |||||||||||||||||||
Operating revenues | 18,630,403 | 29,679 | 18,660,082 | 19,536,181 | 108,362 | 19,644,543 | ||||||||||||||||||
Operating expenses | 16,898,066 | 16,675 | 16,914,741 | 18,111,907 | 104,874 | 18,216,781 | ||||||||||||||||||
Operating income | 1,732,337 | 13,004 | 1,745,341 | 1,424,274 | 3,488 | 1,427,762 | ||||||||||||||||||
Non-operating revenues | 486,628 | 1,354 | 487,982 | 1,053,885 | 22 | 1,053,907 | ||||||||||||||||||
Non-operating expenses | 772,507 | 13,053 | 785,560 | 1,800,449 | 71 | 1,800,520 | ||||||||||||||||||
Income from continuing operations before income tax expense | 1,446,458 | 1,305 | 1,447,763 | 677,710 | 3,439 | 681,149 | ||||||||||||||||||
Income tax expense on continuing operations | 356,454 | 345 | 356,799 | 166,419 | 1,440 | 167,859 | ||||||||||||||||||
Newly included subsidiary’s net loss before acquisition | 5,810 | — | 5,810 | — | — | — | ||||||||||||||||||
Income from continuing operations | 1,095,814 | 960 | 1,096,774 | 511,291 | 1,999 | 513,290 | ||||||||||||||||||
Income from discontinuing operations | 74,204 | — | 74,204 | — | — | — | ||||||||||||||||||
Net income | 1,170,018 | 960 | 1,170,978 | 511,291 | 1,999 | 513,290 | ||||||||||||||||||
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35. | VALUE ADDED INFORMATION |
2006 | 2007 | 2008 | ||||||||||
Salaries and wages | 2,224,598 | 2,242,295 | 2,281,587 | |||||||||
Share-based payment | 531 | 1,239 | 1,922 | |||||||||
Severance indemnities | 240,843 | 359,473 | 362,342 | |||||||||
Employee welfare | 527,062 | 528,902 | 567,878 | |||||||||
Rent | 219,825 | 226,327 | 249,827 | |||||||||
Depreciation | 3,228,293 | 3,225,887 | 3,264,291 | |||||||||
Amortization | 389,710 | 430,623 | 438,544 | |||||||||
Taxes and dues | 197,196 | 195,874 | 200,287 | |||||||||
Total | 7,028,058 | 7,210,620 | 7,366,678 | |||||||||
36. | EMPLOYEE WELFARE |
37. | SUBSEQUENT EVENT |
a. | Merger with KTF |
i) | Purpose of Merger |
ii) | Appraisal rights of Shareholders |
iv) | Accounting Treatment |
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b. | Foreign Currency Exchangeable Bonds |
Total issue amount : | ||
Shares to be exchanged : | KT common stocks or KT ADRs | |
Exchange price per share (in Korean won) : | ||
Period of exercise : | June 2, 2009 through May 26, 2014 | |
Maturity date of bond : | May 26, 2014 | |
Interest rate at maturity : | 2.024% | |
Interest payment method : | Payable twice a year in arrears (every six months) | |
Repayment method : | Lump-sum payment on maturity date | |
Subscription date : | May 27, 2009 | |
Subscription method : | KTF shares owned by NTT DoCoMo, Inc. |
c. | Retirement of Treasury Stock |
38. | RECONCILIATION TO UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES |
a. | Companies Included in Consolidation |
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Percentage of Ownership (%) | Carrying Value | |||||||||||||||||||
2006 | 2007 | 2008 | 2007 | 2008 | ||||||||||||||||
Entity | ||||||||||||||||||||
Listed : | ||||||||||||||||||||
Olivenine | 19.7 | 19.2 | 19.5 | 21,431 | 2,769 | |||||||||||||||
KTSC | 36.9 | 36.9 | 36.9 | 12,338 | 11,072 | |||||||||||||||
KTF Music (formerly, “Bluecord Technology”) | — | 35.3 | 35.3 | 19,526 | 18,705 | |||||||||||||||
Unlisted : | ||||||||||||||||||||
KTP | 44.9 | 44.9 | 44.9 | 28,848 | 31,633 | |||||||||||||||
SFNH BF-(1) | 43.3 | 43.3 | 43.3 | 12,978 | 10,505 | |||||||||||||||
Doremi Media | — | — | — | — | — |
Current assets | ||||
Accounts receivable — trade | 1,420,193 | |||
Other current assets | 1,477,580 | |||
Total current assets | 2,897,773 | |||
Property and equipment, net | 4,177,784 | |||
Other assets | 2,464,479 | |||
Total assets | 9,540,036 | |||
Current liabilities | ||||
Accounts payable | 1,213,506 | |||
Other current liabilities | 830,290 | |||
Total current liabilities | 2,043,796 | |||
Long-term debt, excluding current portion | 1,597,631 | |||
Other long-term liabilities | 804,763 | |||
Total liabilities | 4,446,190 | |||
Minority interest in consolidated subsidiaries | 4,321 | |||
Stockholders’ equity | 5,089,525 | |||
Total liabilities, minority interest and stockholders’ equity | 9,540,036 | |||
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2006 | ||||
Net revenue | 17,440,435 | |||
Net earnings | 1,323,671 | |||
Net earnings per share: | ||||
Basic (in Korean won) | 6,306 | |||
Diluted (in Korean won) | 6,299 |
2007 | 2008 | |||||||
Current assets | 169,535 | 185,447 | ||||||
Non-current assets | 179,439 | 172,011 | ||||||
Total assets | 348,974 | 357,458 | ||||||
Current liabilities | 115,068 | 104,128 | ||||||
Non-current liabilities | 33,817 | 66,491 | ||||||
Total liabilities | 148,885 | 170,619 | ||||||
Net assets | 200,089 | 186,839 | ||||||
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2006 | 2007 | 2008 | ||||||||||
Operating revenues | 4,335,555 | 210,170 | 272,407 | |||||||||
Operating income | 556,766 | 214,369 | 268,978 | |||||||||
Net earnings | 202,879 | 8,294 | (15,551 | ) |
2006 | 2007 | 2008 | ||||||||||
Net cash provided by operating activities | 1,045,235 | 4,487 | 30,172 | |||||||||
Net cash used in investing activities | (690,269 | ) | (23,322 | ) | (53,271 | ) | ||||||
Net cash used in financing activities | (350,278 | ) | (19,992 | ) | (2,546 | ) | ||||||
Effect of changes in consolidated entities | (287,591 | ) | 16,536 | — | ||||||||
Net increase (decrease) in cash and cash equivalents | (282,903 | ) | (22,291 | ) | (25,645 | ) | ||||||
Cash and cash equivalents at beginning of the year | 352,329 | 69,425 | 47,185 | |||||||||
Cash and cash equivalents at end of the year | 69,426 | 47,134 | 21,540 | |||||||||
b. | Debt and Equity Securities |
• | Debt securities that the enterprise has the positive intent and ability to hold to maturity are classified as held-to-maturity securities and reported at amortized cost. | |
• | Debt and equity securities that are bought and held principally for the purpose of selling in the short term are classified as trading securities and reported at fair value, with unrealized gains and losses included in earnings. | |
• | Debt and equity securities not classified as either held-to-maturity securities or trading securities are classified as available-for-sale securities and reported at fair value, with unrealized gains and losses excluded from earnings and reported in a separate component of stockholders’ equity until realized. |
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2007 | ||||||||||||||||
Gross | Gross | |||||||||||||||
Cost or | Unrealized | Unrealized | ||||||||||||||
Amortized Cost | Holding Gains | Holding Losses | Fair Value | |||||||||||||
Equity securities (available-for-sale) | 25,488 | 19,705 | 297 | 44,896 | ||||||||||||
Debt securities (available-for-sale) | 5,156 | — | — | 5,156 | ||||||||||||
30,644 | 19,705 | 297 | 50,052 | |||||||||||||
2008 | ||||||||||||||||
Gross | Gross | |||||||||||||||
Cost or | Unrealized | Unrealized | ||||||||||||||
Amortized Cost | Holding Gains | Holding Losses | Fair Value | |||||||||||||
Equity securities (available-for-sale) | 103,388 | 7,300 | (9,170 | ) | 101,518 | |||||||||||
Debt securities (available-for-sale) | 6,117 | — | (180 | ) | 5,937 | |||||||||||
109,505 | 7,300 | (9,350 | ) | 107,455 | ||||||||||||
c. | Goodwill Impairment including Investor-level Goodwill |
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Balance as of January 1, 2007 | 507,811 | |||
Goodwill acquired during the year | 18,745 | |||
Balance as of December 31, 2007 | 526,556 | |||
Goodwill acquired during the year | 24,692 | |||
Balance as of December 31, 2008 | 551,248 | |||
d. | Equity Method Accounting |
e. | Additional Equity Investments in and Transactions of Subsidiaries |
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f. | Intangible Assets |
2007 | ||||||||||||
Gross Carrying | Accumulated | |||||||||||
Amount | Amortization | Net Amount | ||||||||||
(In millions of Korean won) | ||||||||||||
Amortizable intangible assets: | ||||||||||||
Internal-use software | 775,845 | 464,290 | 311,555 | |||||||||
Frequency usage rights | 1,465,990 | 460,757 | 1,005,233 | |||||||||
Buildings and facility utilization rights | 126,742 | 73,437 | 53,305 | |||||||||
Other | 307,372 | 196,180 | 111,192 | |||||||||
Total | 2,675,949 | 1,194,664 | 1,481,285 | |||||||||
2008 | ||||||||||||
Gross Carrying | Accumulated | |||||||||||
Amount | Amortization | Net Amount | ||||||||||
(In millions of Korean won) | ||||||||||||
Amortizable intangible assets: | ||||||||||||
Internal-use software | 876,471 | 579,663 | 296,808 | |||||||||
Frequency usage rights | 1,465,990 | 594,354 | 871,636 | |||||||||
Buildings and facility utilization rights | 127,896 | 79,799 | 48,097 | |||||||||
Other | 325,485 | 218,756 | 106,729 | |||||||||
Total | 2,795,842 | 1,472,572 | 1,323,270 | |||||||||
Amortization expense: | ||||
For the year ended December 31, 2006 | 182,378 million | |||
For the year ended December 31, 2007 | 284,016 million | |||
For the year ended December 31, 2008 | 306,000 million |
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Year Ending December 31, | ||||
2009 | 296,491 | |||
2010 | 232,948 | |||
2011 | 194,973 | |||
2012 | 147,591 | |||
2013 | 128,430 |
g. | Depreciation |
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Estimated Useful Lives | ||||
Buildings and structures | 5-60 years | |||
Underground access to cable tunnels, and concrete and steel telephone poles | 10-40 years | |||
Machinery and equipment | 3-15 years | |||
Vehicles | 3-10 years | |||
Tools, furniture and fixtures: | ||||
Steel safe boxes | 20 years | |||
Tools, computer equipment, furniture and fixtures | 3-8 years |
h. | Interest Capitalization |
2006 | 2007 | 2008 | ||||||||||
Total interest costs incurred | 379,017 | 458,951 | 471,816 | |||||||||
Interest capitalized | 9,169 | 13,372 | 15,376 | |||||||||
Amounts charged to expense | 369,848 | 445,579 | 456,440 | |||||||||
i. | Revenue Recognition |
j. | Income Taxes |
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k. | Foreign Currency Transactions |
l. | Minority Interest Income in Consolidated Subsidiaries |
m. | Stockholder’s Agreement between KT and DoCoMo |
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n. | Other |
o. | Comprehensive Income |
2006 | 2007 | 2008 | ||||||||||
Net earnings as adjusted in accordance with U.S. GAAP | 1,329,343 | 1,068,533 | 518,245 | |||||||||
Other comprehensive income, net of tax: | ||||||||||||
Foreign currency translation adjustments | (10,520 | ) | 19,295 | 16,921 | ||||||||
Unrealized gains on investments: | ||||||||||||
Unrealized holding gains (losses), net of tax of | 3,562 | 2,698 | (6,762 | ) | ||||||||
Reclassification adjustment for losses realized in net earning due to disposal, net of tax of | 102 | 2,648 | 2,436 | |||||||||
Gains (losses) on valuation of derivatives for cash flow hedge, net of tax of | — | 2,024 | (4,598 | ) | ||||||||
Comprehensive income as adjusted in accordance with U.S. GAAP | 1,322,487 | 1,095,198 | 526,242 | |||||||||
p. | Statements of Cash Flows |
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q. | Significant New Accounting Pronouncements |
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r. | U.S. GAAP Reconciliations |
Note | ||||||||||||||||
Reference | 2006 | 2007 | 2008 | |||||||||||||
Net income (attributable to equity holders of the parent) in accordance with Korean GAAP | 1,291,863 | 1,056,227 | 449,810 | |||||||||||||
Adjustments: | ||||||||||||||||
U.S. GAAP adjustments of equity method affiliates | 38.a | 1,250 | — | — | ||||||||||||
Goodwill impairment | 38.c | — | — | (13,948 | ) | |||||||||||
Equity in income of associates: | ||||||||||||||||
Reversal of amortization of goodwill | 38.c | 145,510 | 180,343 | 166,422 | ||||||||||||
Impairment loss relating to equity investee | 38.c | — | — | (9,466 | ) | |||||||||||
Additional acquisitions of equity investees | 38.e | (26,337 | ) | (15,760 | ) | 6,351 | ||||||||||
Intangible assets | 38.f | (4,742 | ) | (13,652 | ) | (14,329 | ) | |||||||||
Property and equipment | 38.g | (150,885 | ) | (207,573 | ) | (114,744 | ) | |||||||||
Interest capitalization (including related depreciation), net | 38.h | 8,631 | 5,310 | (2,128 | ) | |||||||||||
Capitalized foreign exchange transactions, net | 38.k | 2,789 | 3,433 | 880 | ||||||||||||
Service installation fees | 38.i | 17,615 | (9,236 | ) | 5,865 | |||||||||||
Deferred income tax — methodology difference | 38.j | 37,590 | (22,618 | ) | 4,275 | |||||||||||
Deferred income tax effects of U.S. GAAP adjustments | 38.j | 1,346 | 57,363 | (15,228 | ) | |||||||||||
Miscellaneous accounts | 38.j | (68 | ) | 13,886 | 35,230 | |||||||||||
Foreign currency translation of convertible notes | 38.k | 948 | — | — | ||||||||||||
Minority interest income | 38.l | 3,833 | 20,810 | 19,255 | ||||||||||||
37,480 | 12,306 | 68,435 | ||||||||||||||
Net earnings as adjusted in accordance with U.S. GAAP | 1,329,343 | 1,068,533 | 518,245 | |||||||||||||
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2006 | 2007 | 2008 | ||||||||||||||||||||||
Diluted | Basic | Diluted | Basic | Diluted | Basic | |||||||||||||||||||
(In millions of Korean won except per share data) | ||||||||||||||||||||||||
CONSOLIDATED | ||||||||||||||||||||||||
Earnings from continuing operations | 1,329,034 | 1,328,995 | 994,399 | 994,399 | 518,245 | 518,245 | ||||||||||||||||||
Earnings from discontinuing operations | 348 | 348 | 74,134 | 74,134 | — | — | ||||||||||||||||||
Net earnings available | 1,329,382 | 1,329,343 | 1,068,533 | 1,068,533 | 518,245 | 518,245 | ||||||||||||||||||
AVERAGE EQUIVALENT SHARES | ||||||||||||||||||||||||
Shares of common stock outstanding | 209,894,649 | 209,894,649 | 206,599,294 | 206,599,294 | 202,891,015 | 202,891,015 | ||||||||||||||||||
Dilutive effect of convertible notes | 254,949 | — | — | — | — | — | ||||||||||||||||||
Total average equivalent shares | 210,149,598 | 209,894,649 | 206,599,294 | 206,599,294 | 202,891,015 | 202,891,015 | ||||||||||||||||||
PER SHARE AMOUNTS | ||||||||||||||||||||||||
Earnings from continuing operations | 6,325 | 6,331 | 4,814 | 4,814 | 2,554 | 2,554 | ||||||||||||||||||
Earnings from discontinuing operations | 2 | 2 | 358 | 358 | — | — | ||||||||||||||||||
Net earnings per share | 6,327 | 6,333 | 5,172 | 5,172 | 2,554 | 2,554 | ||||||||||||||||||
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Note Reference | 2007 | 2008 | ||||||||||
Stockholders’ equity in accordance with Korean GAAP | 11,137,766 | 11,087,898 | ||||||||||
Adjustments: | ||||||||||||
Goodwill impairment | 38.c | (12,947 | ) | (26,895 | ) | |||||||
Equity in earnings of equity method affiliates: | ||||||||||||
Reversal of goodwill amortization | 38.c | 846,305 | 1,012,727 | |||||||||
Impairment loss relating to equity investee | 38.c | (1,462,443 | ) | (1,471,474 | ) | |||||||
Additional acquisitions of equity investees | 38.e | 766,291 | 787,293 | |||||||||
Different useful life of intangibles | 38.f | 111,631 | 111,631 | |||||||||
Intangible assets | 38.f | 53,010 | 38,681 | |||||||||
Accumulated depreciation | 38.g | (510,021 | ) | (624,765 | ) | |||||||
Interest capitalization, net | 38.h | 67,822 | 65,694 | |||||||||
Capitalized foreign exchange transactions, net | 38.k | (3,896 | ) | (3,016 | ) | |||||||
Service installation fees | 38.i | (481,618 | ) | (475,753 | ) | |||||||
Deferred tax — methodology difference | 38.j | 28,518 | 32,864 | |||||||||
Deferred tax effects of U.S. GAAP adjustments | 38.j | 226,605 | 209,666 | |||||||||
Miscellaneous accounts | 38.j | (44,704 | ) | (9,474 | ) | |||||||
Minority interest | 38.l | (2,283,928 | ) | (2,244,679 | ) | |||||||
(2,699,375 | ) | (2,597,500 | ) | |||||||||
Stockholders’ equity as adjusted in accordance with U.S. GAAP | 8,438,391 | 8,490,398 | ||||||||||
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s. | Condensed Consolidated U.S. GAAP Financial Information |
2007 | 2008 | |||||||
Current assets | ||||||||
Accounts receivable — trade | 2,510,955 | 2,963,183 | ||||||
Other current assets | 2,974,231 | 3,946,259 | ||||||
Total current assets | 5,485,186 | 6,909,442 | ||||||
Investments | 413,012 | 496,052 | ||||||
Property and equipment, net | 14,670,821 | 14,460,108 | ||||||
Goodwill | 557,119 | 584,761 | ||||||
Other assets | 2,897,283 | 3,523,729 | ||||||
Total assets | 24,023,421 | 25,974,092 | ||||||
Current liabilities | ||||||||
Accounts payable — trade | 1,009,032 | 827,971 | ||||||
Other current liabilities | 4,144,455 | 4,441,864 | ||||||
Total current liabilities | 5,153,487 | 5,269,835 | ||||||
Long-term debt, excluding current portion | 5,970,098 | 7,910,118 | ||||||
Other long-term liabilities | 2,310,831 | 2,184,470 | ||||||
Total liabilities | 13,434,416 | 15,364,423 | ||||||
Minority interest in consolidated subsidiaries | 2,150,614 | 2,119,271 | ||||||
Stockholders’ equity | 8,438,391 | 8,490,398 | ||||||
Total liabilities, minority interest and stockholders’ equity | 24,023,421 | 25,974,092 | ||||||
2006 | 2007 | 2008 | ||||||||||
Beginning of the year | 7,345,041 | 8,037,993 | 8,438,391 | |||||||||
Net earnings | 1,329,343 | 1,068,533 | 518,245 | |||||||||
Retirement of treasury stock | (213,644 | ) | (196,329 | ) | (73,807 | ) | ||||||
Foreign currency translation adjustments | (10,520 | ) | 19,295 | 16,921 | ||||||||
Unrealized gains on investments, net of tax | 3,664 | 5,346 | (4,326 | ) | ||||||||
Sale of treasury stock, net | 14,368 | 884 | 807 | |||||||||
Dividends | (426,113 | ) | (416,191 | ) | (407,374 | ) | ||||||
Adoption of FIN 48 | — | (58,667 | ) | — | ||||||||
Changes in consolidated entities | — | (23,990 | ) | — | ||||||||
Other, net of tax | (4,146 | ) | 1,517 | 1,541 | ||||||||
End of the year | 8,037,993 | 8,438,391 | 8,490,398 | |||||||||
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2006 | 2007 | 2008 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES : | ||||||||||||
Net income | 1,329,343 | 1,068,533 | 518,245 | |||||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 2,882,488 | 3,695,405 | 3,663,037 | |||||||||
Provision for doubtful accounts | 47,515 | 67,263 | 139,441 | |||||||||
Loss on disposal of property and equipment | 73,539 | 76,839 | 89,734 | |||||||||
Equity in loss of associates | (81,488 | ) | (145,861 | ) | (164,336 | ) | ||||||
Deferred income tax expense (benefit) | (15,261 | ) | (68,417 | ) | (115,337 | ) | ||||||
Gain on disposition ofavailable-for-sale securities, net | (63,133 | ) | (11,428 | ) | (5,587 | ) | ||||||
Impairment losses of equity method affiliates | — | — | 22,058 | |||||||||
Foreign currency translation gain (loss), net | (114,950 | ) | 7,293 | 753,592 | ||||||||
Gain (loss) on settlement and valuation of derivatives, net | 92,784 | (22,440 | ) | (649,360 | ) | |||||||
Minority interest income in earnings of consolidated subsidiaries | 93,874 | 91,521 | 55,178 | |||||||||
Changes in assets and liabilities related to operating activities: | ||||||||||||
Notes and accounts receivable | 250,695 | (416,506 | ) | (161,287 | ) | |||||||
Inventories | 68,218 | (72,708 | ) | (142,512 | ) | |||||||
Advance payments | 52,575 | (20,599 | ) | (2,795 | ) | |||||||
Notes and long-term accounts receivable | (20,705 | ) | (9,384 | ) | (654,248 | ) | ||||||
Accounts payable | (81,279 | ) | 14,740 | (423,619 | ) | |||||||
Advance receipts | (610 | ) | (30,484 | ) | 19,783 | |||||||
Income taxes payable | 234,888 | (150,832 | ) | (153,173 | ) | |||||||
Prepaid expenses | (5,314 | ) | (12,678 | ) | (44,291 | ) | ||||||
Withholdings | (340 | ) | 24,657 | 26,404 | ||||||||
Accrued expenses | 7,821 | 66,584 | 24,904 | |||||||||
Refundable deposits for telephone installation | (48,557 | ) | (66,145 | ) | (59,437 | ) | ||||||
Payment of severance indemnities | 158,423 | 254,671 | 140,352 | |||||||||
Deposits for severance indemnities | (150,621 | ) | (132,427 | ) | (148,822 | ) | ||||||
Other, net | (42,900 | ) | 52,483 | 160,633 | ||||||||
Net Cash Provided by Operating Activities | 4,667,005 | 4,260,080 | 2,888,557 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES : | ||||||||||||
Acquisition of property and equipment | (2,827,851 | ) | (3,621,428 | ) | (3,322,381 | ) | ||||||
Disposal of property and equipment | 54,819 | 103,471 | 53,606 | |||||||||
Decrease (increase) in short-term financial instruments, net | 369,902 | 114,459 | 209,474 | |||||||||
Disposal ofavailable-for-sale securities | 690,177 | 1,181,025 | 614,405 | |||||||||
Decrease in equity method investment securities | 60,785 | 10,807 | 1,047 |
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2006 | 2007 | 2008 | ||||||||||
Collection ofheld-to-maturity securities | 607 | 252 | 5 | |||||||||
Acquisition ofavailable-for-sale securities | (647,051 | ) | (981,008 | ) | (692,289 | ) | ||||||
Acquisition of equity method investment securities | (9,482 | ) | (7,220 | ) | (123,171 | ) | ||||||
Acquisition ofheld-to-maturity securities | (281 | ) | (5 | ) | (13,988 | ) | ||||||
Acquisition of assets and liabilities of consolidated subsidiaries | (109,853 | ) | (31,928 | ) | (5,619 | ) | ||||||
Other, net | (13,715 | ) | (178,630 | ) | (223,359 | ) | ||||||
Net Cash Used in Investing Activities | (2,431,943 | ) | (3,410,205 | ) | (3,502,270 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES : | ||||||||||||
Payment of dividends | (426,663 | ) | (472,774 | ) | (408,242 | ) | ||||||
Repayment of short-term borrowings | 25,485 | 30,601 | 55,440 | |||||||||
Repayment of long-term borrowings and current portion of long-term debt | (922,740 | ) | (1,314,424 | ) | (2,121,831 | ) | ||||||
Increase in long-term borrowings | 235,831 | 872,085 | 3,735,500 | |||||||||
Acquisition of treasury stock | (213,664 | ) | (195,217 | ) | (73,807 | ) | ||||||
Inflows (outflows) from capital transactions of consolidated entities | (164,884 | ) | (150,055 | ) | (110,917 | ) | ||||||
Increase in accounts receivable — trade | (200,000 | ) | — | — | ||||||||
Other, net | (3,597 | ) | (41,383 | ) | 70,702 | |||||||
Net Cash Used in Financing Activities | (1,670,232 | ) | (1,271,167 | ) | 1,146,845 | |||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 564,830 | (421,292 | ) | 533,132 | ||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR | 1,194,314 | 1,759,144 | 1,337,852 | |||||||||
CASH AND CASH EQUIVALENTS AT END OF THE YEAR | 1,759,144 | 1,337,852 | 1,870,984 | |||||||||
Supplemental schedule: | ||||||||||||
Cash paid for interest (net of amounts capitalized) | 385,553 | 433,471 | 406,485 | |||||||||
Cash paid for income taxes | 322,866 | 486,448 | 453,532 |
39. | ADDITIONAL U.S. GAAP DISCLOSURES |
a. | Income Tax Expense |
2006 | 2007 | 2008 | ||||||||||
Current income tax expense | 372,351 | 337,904 | 293,512 | |||||||||
Deferred income tax expense (benefit) | (15,261 | ) | (68,417 | ) | (115,337 | ) | ||||||
�� | ||||||||||||
Income tax expense | 357,090 | 269,487 | 178,175 | |||||||||
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2006 | 2007 | 2008 | ||||||||||
Provision for income taxes at statutory tax rates | 489,584 | 372,704 | 191,502 | |||||||||
Tax credits | (147,509 | ) | (121,159 | ) | (197,492 | ) | ||||||
Additional income tax payment (refund) related to prior year | (26,449 | ) | (23,683 | ) | (4,716 | ) | ||||||
Non-temporary difference | 51,341 | 18,217 | 24,863 | |||||||||
Changes in deferred income tax unrecognized | (9,877 | ) | 10,039 | 16,058 | ||||||||
Tax rate changes | — | — | 142,437 | |||||||||
Others | — | 13,369 | 5,523 | |||||||||
Actual provision for income taxes | 357,090 | 269,487 | 178,175 | |||||||||
2007 | 2008 | |||||||
Deferred income tax assets: | ||||||||
Allowance for doubtful accounts | 98,470 | 119,855 | ||||||
Refundable deposits for telephone installation | 14,850 | 11,205 | ||||||
Investment securities | 3,653 | 8,840 | ||||||
Inventories | 9,619 | 4,543 | ||||||
Property and equipment | 130,553 | 130,443 | ||||||
Unearned revenue | 111,144 | 74,560 | ||||||
Equity method investment securities | 46,131 | 24,251 | ||||||
Tax credit carryforwards | 71,555 | 131,102 | ||||||
Tax loss carryforwards | 18,529 | 49,183 | ||||||
Accrued expenses | 81,928 | 53,825 | ||||||
Other | 98,816 | 240,529 | ||||||
Total deferred income tax assets | 685,248 | 848,336 | ||||||
Valuation allowance | (20,558 | ) | (78,444 | ) | ||||
Deferred income tax assets | 664,690 | 769,892 | ||||||
Deferred income tax liabilities: | ||||||||
Equity method investment securities | (58,973 | ) | (41,678 | ) | ||||
Accrued interest income | (1,682 | ) | (2,798 | ) | ||||
Deferred income tax liabilities | (60,655 | ) | (44,476 | ) | ||||
Net deferred income tax assets | 604,035 | 725,416 | ||||||
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2007 | 2008 | |||||||
Balance at January 1, | 67,142 | 6,450 | ||||||
Additions to tax positions recorded during the current year | 3,303 | 573 | ||||||
Additions to tax positions recorded during prior years | — | 268 | ||||||
Reductions to tax positions recorded during prior years | — | (226 | ) | |||||
Reductions in tax positions due to lapse of statutory limitations | — | — | ||||||
Reductions for settlement | (63,995 | ) | (2,813 | ) | ||||
Balance at December 31, | 6,450 | 4,252 | ||||||
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b. | Fair Value Measurements (SFAS No. 157) |
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Level 1 | Level 2 | Level 3 | Total | |||||||||||||
ASSETS | ||||||||||||||||
Securities | ||||||||||||||||
• Beneficiary certificates | 39,696 | — | — | 39,696 | ||||||||||||
• Available-for-sale securities : | 107,455 | — | — | 107,455 | ||||||||||||
• Held-to-maturity securities | — | 14,073 | — | 14,073 | ||||||||||||
Derivative instruments assets : | ||||||||||||||||
• Currency swap | — | 72,127 | — | 72,127 | ||||||||||||
• Combined interest rate currency swap | — | 417,731 | — | 417,731 | ||||||||||||
• Put option | — | — | 14,540 | 14,540 | ||||||||||||
Total | 147,151 | 503,931 | 14,540 | 665,622 | ||||||||||||
LIABILITIES | ||||||||||||||||
Derivative instruments liabilities : | ||||||||||||||||
• Interest rate swap | — | 15,641 | — | 15,641 | ||||||||||||
• Currency forwards | — | 4,755 | — | 4,755 | ||||||||||||
Total | — | 20,396 | — | 20,396 | ||||||||||||
Balances at January 1, 2008 | 1,971 | |||
Unrealized gain included in earnings | 12,569 | |||
Unrealized gain (loss) included in other comprehensive income | — | |||
Purchases, sales, issuances and settlements, net | — | |||
Transfer in and/or out of Level 3 | — | |||
Balances at December 31, 2008 | 14,540 | |||
c. | Fair Value of Financial Instruments (SFAS No. 107) |
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2007 | 2008 | |||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||
Cash and cash equivalents | 1,337,852 | 1,337,852 | 1,871,018 | 1,871,018 | ||||||||||||
Short-term financial instruments | 259,504 | 259,504 | 86,059 | 86,059 | ||||||||||||
Notes and accounts receivable | 3,058,264 | 3,058,264 | 3,805,072 | 3,805,072 | ||||||||||||
Loans to employees | 163,864 | 149,305 | 56,020 | 52,616 | ||||||||||||
Accounts payable | 1,009,032 | 1,009,032 | 1,212,756 | 1,212,756 | ||||||||||||
Short-term borrowings | 199,768 | 199,768 | 261,006 | 261,006 | ||||||||||||
Long-term debt, including current portion | 6,979,913 | 6,848,696 | 9,371,938 | 9,182,625 |
d. | Accrued Severance Indemnities |
Year Ending December 31, | ||||
2009 | 5,795 | |||
2010 | 13,701 | |||
2011 | 15,130 | |||
2012 | 24,614 | |||
2013 | 46,633 | |||
2014-2018 | 551,582 |
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Title: | Chief Executive Officer |
Table of Contents
1 | Articles of Incorporation of KT Corporation (English translation) Form of Common Stock Certificate of KT Corporation, par value | |||
2 | .1* | Deposit Agreement dated as of May 25, 1999 entered into among KT Corporation, Citibank, N.A., as depositary, and all Holders and Beneficial Owners of American Depositary Shares evidenced by the American Depositary Receipts issued thereunder, including the form of American depositary receipt (incorporated herein by reference to Exhibit(a)(i) of the Registrant’s Registration Statement (RegistrationNo. 333-13578) onForm F-6) | ||
2 | .2* | Form of Amendment No. 1 Deposit Agreement dated as of May 25, 1999 entered into among KT Corporation, Citibank, N.A., as depositary, and all Holders and Beneficial Owners of American Depositary Shares evidenced by the American Depositary Receipts issued thereunder, including the form of American depositary receipt (incorporated herein by reference to Exhibit(a)(ii) of the Registrant’s Registration Statement (RegistrationNo. 333-13578) onForm F-6) | ||
2 | .3* | Letter from Citibank, N.A., as depositary, to the Registrant relating to the pre-release of the American depositary receipts (incorporated herein by reference to the Registrant’s Registration Statement (RegistrationNo. 333-10330) onForm F-6) | ||
2 | .4* | Letter from Citibank, N.A., as depositary, to the Registrant relating to the establishment of a direct registration system for ADSs and the issuance of uncertified ADSs as part of the direct registration system. (incorporated herein by reference to Exhibit 2.4 of the Registrant’s Annual Report onForm 20-F filed on June 30, 2008) | ||
4 | .1* | The Merger Agreement dated January 20, 2009, entered into by and between KT Corporation and KT Freetel Co., Ltd. (incorporated herein by reference to Annex I of the Registrant’s Registration Statement (RegistrationNo. 333-156817) onForm F-4) | ||
8 | .1 | List of subsidiaries of KT Corporation | ||
12 | .1 | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||
12 | .2 | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||
13 | .1 | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||
15 | .1 | The Telecommunications Basic Law (English translation) | ||
15 | .2 | Enforcement Decree of the Telecommunications Basic Law (English translation) | ||
15 | .3 | The Telecommunications Business Act (English translation) | ||
15 | .4 | Enforcement Decree of the Telecommunications Business Act (English translation) |
* | Filed previously. |